Bloomberg The Close Sep 22, 2026 · recorded Sep 21, 2026
With Jeffrey Sherman, Deputy CIO of DoubleLine Capital
The 10-year Treasury yield set a new high for this cycle the week before, and the 30-year bond trades near its 2023 highs, Jeffrey Sherman said. He said Treasury Secretary Scott Bessent's efforts to push long-term yields down are not working.
He described those efforts as the Treasury buying back long-dated bonds and paying for them with short-term bills. He said the program is too small to work, and that investors can see it.
"The bond market doesn't believe the Treasury Secretary right now."
Jeffrey Sherman is deputy chief investment officer of DoubleLine Capital, where he has worked since 2009 and runs the firm's multi-sector and derivative-based strategies. He spoke to Bloomberg's The Close on Monday, September 21.
The full segment is covered here so you can skip it.
Here are the 4 takeaways that matter.
Key Takeaways
Investors are avoiding long-term bonds, not bonds in general
DoubleLine is heavily exposed to the shortest-dated bonds
Treasury's buybacks are too small to control long-term yields, and may only be preparation for a larger move
AI borrowing will compete with the Treasury for bond buyers
Wall Street estimates for next year's AI spending run from $900 billion to $1.4 trillion
Short-dated bonds from the biggest tech companies look attractive because their other businesses can pay for AI
1. Stay Short
The host asked whether today's high yields are a reason to buy or a reason to stand aside.
Not a time to stand aside
"I don't think it's time to move to the sidelines." — Jeffrey Sherman
He said bond investors have felt a lot of pain. The Bloomberg US Aggregate bond index is down about one and a half percent for the year, a little better after the day's trading.
The problem is a flat yield curve
The difficulty, he said, is the shape of the curve. Yields on long-term bonds are barely higher than yields on short-term ones, and the gap has been narrowing since the Iran conflict began. The difference between 2-year and 10-year yields is about 25 to 30 basis points, which he said is not enough to draw investors into bonds maturing in the middle years.
"But the front end is still offering a lot of value" — Jeffrey Sherman
The front end means bonds that mature soonest. DoubleLine has kept buying them, including short-term corporate bonds.
"We're very much exposed to the front end" — Jeffrey Sherman
Clients have been burned too often
Even with the 10-year yield at roughly 5%, he said, few buyers are showing up. Clients he met in New York the week before told him they had been "burned so many times on this kind of rates trade" that they do not want to take part. He thinks the shape of the curve explains much of that.
Before doing more, he wants to watch a few more days of trading and see what comes out of the UN meetings that week. He said he is not hopeful they will bring new direction, given the fiscal problems.
"Investors aren't shunning bonds, they're just shunning the back end of the curve today" — Jeffrey Sherman
He said that trade holds until inflation gets close to the Fed's target.
