Billionaire fund manager Jeffrey Gundlach said that a “1940s-era central bank policy may make a return if long-dated bond yields continue to rise.” This according to a recent article in Bloomberg.

In a recent webcast, the DoubleLine Capital CIO said, “I certainly do expect that Jay Powell would follow through on controlling the yield curve should the 3-year rate really get unhinged.” The article notes that longer-dated Treasuries have sold off in the past few weeks “amid growing optimism that the economic damage from the coronavirus has bottomed and U.S. states will soon reopen.” It notes that rising rates deepened the spread between 5- and 30-year yields to the highest level since 2016.

The article reports that Gundlach also predicted a stock market dip from its “lofty” perch, adding that the economy may see an increase in white-collar unemployment. He argued that quantitative easing and zero rates are ineffective and that negative rates are “fatal” for the banking system. Gundlach expressed a bullish view toward gold and predicts a wave of corporate credit downgrades coming.