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Delivering Alpha

Bridgewater's Dalio: There's a 'dangerous situation' in the debt market now

Dalio: 'Only so much you can squeeze out of a debt cycle'

The debt market is in a "dangerous situation" as central banks around the world lose their ability to stimulate growth, hedge fund giant Ray Dalio said Tuesday.

As the world faces more than $11 trillion in negative-yielding debt, Dalio said central banks like the Fed, the European Central Bank and the Bank of Japan are facing a dilemma.

"There's only so much you can squeeze out of the debt cycle, and we're there globally," the head of Bridgewater Associates said at the Delivering Alpha conference presented by CNBC and Institutional Investor. "You can't lower interest rates more."

Ray Dalio
David A. Grogan | CNBC

Dalio spoke as Fed officials contemplate a rate hike at some point this year. Market-implied probability indicates that the Fed won't hike until at least December. Its September meeting is next week.

While monetary policy has been used as a fuel for growth and asset price appreciation, Dalio said its effectiveness is waning.

"We are to various degrees close to pushing on a string," he said.

This is a developing news story. Please check back for updates.