Jeffrey Gundlach on the Fed
Jeffrey Gundlach was surprised when the Fed switched to a dovish stance and predicted no hikes this year, and he thinks that change is “not reassuring.” With US-China trade tensions ramping up and weaker economic reports, markets now expect two to three Fed rate cuts by the end of this month. Conversely, Gundlach believes the Fed will probably not cut rates in June, but could later this summer. According to him, July “is a pretty good possibility,” while “September is virtually a lock.” Based his reading of the bond market (BND), he thinks the Fed could cut rates by a quarter of a percentage point two or three times this year.
Gundlach stands by 6% yield call
The billionaire investor has stood by his long-held call of ten-year Treasury securities’ (TLT) yield rising to 6% by 2021 if the government doesn’t get involved in manipulating bond yields. He said, “We will go to 6% for sure if there is true free market pricing. The Fed has added a lot of information this year, which is contradictory to prior information.”