Key points
DoubleLine Capital CEO Jeffrey Gundlach said Wednesday he now expects no more than one interest rate cut this year as the Federal Reserve maintains tight policies to combat persistent inflation. “It is clear that inflation rates are not making progress because [Jerome Powell] “I don’t think it will happen in June.” Prominent fixed income investor whose firm managed more than $95 billion. at the end of 2023, said the most important moment of the Fed’s policy event on Wednesday was that central bank Chairman Jerome Powell had all but ruled out the possibility of raising rates: “Higher and longer… the mantra seems to be continuing, but without it.” raising rates. So it’s a pretty good situation,” Gundlach said. Treasury yields fell to session lows and stocks soared to session highs as Powell said the next policy move would not be a rate hike. “I think the next rate change is unlikely. there will be a hike. I would say it’s unlikely,” Powell said during a press conference after the decision. Gundlach, often referred to as the “bond king,” said the bond market has many attractive opportunities for yield-hunting investors, such as A-, BBB-rated Corporate Bonds “You can get yields in the high sevens without much risk. And it looks like it will be a very comfortable place to invest without much volatility. So, you want to take advantage of this inverted curve that has been inverted for a very long time,” Gundlach said, referring to conditions where short-term rates are higher than long-term yields. The widely followed investor explained that he only likes “moderate risk assets” and has taken a neutral stance on stocks in particular.
