Gross, Gundlach hint at credit crunch as rates, bank woes hit lending

"Rather unbelievable," Gross continued."450 basis points and more rate hikes in 12 months time are bound to affect balance sheets that use proper accounting — duration and credit as well."

Gross — who shares the"Bond King" moniker with Gundlach — likely meant that higher rates have eroded the value of banks' bonds and other assets, and exposed lenders to greater risk of loan defaults. that small businesses are finding it as costly and difficult to access credit today as they did at the height of the financial crisis.

"The NFIB Small Business Credit Conditions Index is plummeting and it is now in the same place it was in late 2007/early 2008," the DoubleLine Capital CEO said. The two billionaire investors seem worried that banks — spooked by the tidal wave of withdrawals that hit SVB and the blow to their bond portfolios over the past year — mayThat could translate into a wideron an imminent downturn. Gross urged investors to be careful as he expects a recession shortly, while Gundlach flagged"red alert recession signals" in the bond market.

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