Doubleline’s Gundlach says that his basicase has been reduced one rate this year, two max

Jeffrey Gundlach, CEO of Doubleline Capital, said on Wednesday that he only expects one rate reduction before 2025 – a maximum of two lowering – while the Federal Reserve patiently waits for incoming data to assess the state of the labor market and inflation.

“A maximum of two cuts this year. And I mean a maximum, I do not predict two cuts. I just think that’s the most that you might think about,” said Gundlach on CNBC’s “closing bell.” “At the moment, if you had let me choose a number, I would say that there would now be one cut the basic case and a maximum of two.”

The central bank held the interest rates on Wednesday unchanged after three consecutive cuts until the end of 2024. Fed chairman Jerome Powell emphasized that the Central Bank is not in a hurry to adjust its policy position, in particular because the economy remains strong.

“It will be a slow process to reach an obstacle to reduce the rates again … I don’t think you will see a reduction during the next FED meeting,” Gundlach said. “He is clearly focused on stability in the unemployment rate at the moment in terms of being unnecessary to lower the rates.”

The remarkable fixed-interest investor thinks that the long-term treasury yields have more room to rise. He noted that the benchmark 10-year rate Has increased around 85 basic points since the FED last year reduced the rates for the first time.

“I think the rates were not harvested on the long side,” he said. “I think the rates will be one step higher.”

Gundlach warned against the possession of risky assets at the moment because of his vision of long -term interest rate and his observation that valuations are high.