Key Points
- DoubleLine Capital CEO Jeffrey Gundlach said Wednesday that he now sees no more than one interest rate cut this year.
- The noted fixed income investor said the most important moment from the Fed’s policy event on Wednesday was when the central bank’s Chair Jerome Powell all but ruled out the possibility of a rate hike.
- Treasury yields dropped to their session lows and stocks shot to session highs as Powell said the next policy move will not be a rate increase.
DoubleLine Capital CEO Jeffrey Gundlach said Wednesday that he now sees no more than one interest rate cut this year as the Federal Reserve keeps policy tight to fight stubborn inflation. “The inflation rate clearly is the one that is lacking progress as [Jerome Powell] put it, so I’m going to lean on one rate cut,” Gundlach said on CNBC’s ” Closing Bell.” “I don’t think it’s coming in June.” The noted fixed income investor, whose firm managed more than $95 billion at the end of 2023, said the most important moment from the Fed’s policy event on Wednesday was when the central bank’s Chair Jerome Powell all but ruled out the possibility of a rate hike. “Higher for longer … seems like the mantra continues, but without a rate hike. So this is a pretty good environment,” Gundlach said. Treasury yields dropped to their session lows and stocks shot to session highs as Powell said the next policy move will not be a rate increase. “I think it’s unlikely that the next policy rate move will be a hike. I’d say it’s unlikely,” said Powell during the press conference following the decision. Gundlach, often called the “bond king,” said there are many attractive opportunities in the fixed income market for investors hunting for yields, such as A-, BBB-rated corporate bonds. “You can get yields that are in the mid-sevens without a lot of risk. And that seems like it’s going to be a very comfortable place to invest without a lot of volatility. So you want to take advantage of this inverted curve, which has been inverted for a very long time,” Gundlach said, referring to conditions when short-term rates are higher than long-term yields. The widely followed investor clarified that he only likes “modest risk assets,” and in particular took a neutral stance on equities.
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