Bond Investors Can Calm Down, "King of Bonds" Jeffrey Gundlach Doesn't 'See Liquidity Problems In The Bond Market'

In the last few days there have been a lot of reports, articles and op-eds on the concerns of liquidity in the bond markets. Several investors believe that liquidity is drying up. However, "King of Bonds" and Dobleline Capital founder, Jeffrey Gundlach, doesn't think there is a liquidity problem in bond markets.

Gundlach was on CNBC Wednesday to explain why he thinks so.

A Y2K Kind of Scare

"I think, people are too worried about it," Gundlach began. "I think, the liquidity of the bond market is one of these things that's suddenly has turned into a Y2K kind of a scare. Where everyone is talking about it because everybody is talking about it. People are asking questions about the liquidity of the bond markets because they read that people are asking questions about liquidity in the bond market."

Haven't Faced Liquidity Problems

He continued, "At Doubleline, we don't see liquidity problems in the bond market. We haven't had problems moving our positions around. It might be because we do things fairly simplistically and we don't have this very complicated way of trading the market and we are also more of a buy and hold investor. So, we have never relied upon anything resembling high turnover trading at any of our Doubleline fixed income funds. And for that reason liquidity to us isn't that precious."

Bid Ask Spread Is Cause Of Concern

"But those that are talking about liquidity do have a point and that is that the bid ask spreads are worse than they were in the corporate bond market. And when there is trouble some of the things that used to cushion the market were expansion of balance sheet on Wall Street taht would take up some of the selling pressure. That doesn't happen anymore," Gundlach said.