Billionaire Jeffrey Gundlach, also known as the “King of Bonds,” has predicted that the Federal Reserve will cut interest rates substantially soon. “Red flag recession signs,” he added, noting that all US Treasury yields for two years and beyond are “well below the fed funds rate.”
Doubleline CEO on Fed rate cuts and recession
Jeffrey Gundlach, CEO and chief investment officer of investment management firm Doubleline, expects the Federal Reserve to cut interest rates substantially soon. Gundlach is nicknamed “the Bond King” after he graced the cover of Barron’s as “The New Bond King” in 2011. According to Forbes, his net worth is currently $2.2 billion.
The billionaire tweeted on Friday:
I predict that the Federal Reserve will cut rates substantially soon.
However, he cautioned: “I’m wrong about 30% of the time, so keep that in mind in any decision-making.”
The Federal Reserve raised interest rates by 25 basis points (bps) this week despite the banking crisis. Fed Chairman Jerome Powell said he does not expect the Fed to cut interest rates this year.
“UST (US Treasury) 2 years versus 10 years is now 40 basis points inverted. It was 107 basis points just a few weeks ago. All UST yields over two years and above are well below the fed funds rate,” Gundlach explained in a follow-up tweet. A yield curve inversion occurs when the yields on shorter-term Treasury bonds exceed those on longer-term bonds. The Doubleline executive emphasized:
Red warning signs of recession.
Gundlach recently said that the last rate hike would be the last hike by the Federal Reserve. In February, the billionaire warned of the painful results of the coming recession.
Many people want the Federal Reserve to cut interest rates. Tesla and Twitter CEO Elon Musk tweeted last Friday that the Fed is “operating too latency on their data,” noting that interest rates “need to drop immediately.” Like Gundlach, Galaxy Digital CEO Mike Novogratz also expects the Fed to cut interest rates “sooner than we think.”
Meanwhile, several people are predicting a severe recession in the US. Famed economist David Rosenberg warned of a “hard landing” and recession last week. Gold fanatic and economist Peter Schiff said this week that inflation is about to get much worse, not that the cost of living for Americans is going up.
What do you think about Jeffrey Gundlach’s prediction? Let us know in the comments section.
image credits: Shutterstock, Pixabay, Wiki Commons
Disclaimer: This article is for informational purposes only. It is not a direct offer or a solicitation of an offer to buy or sell, or a recommendation or endorsement of any product, service or company. bitcoin.com does not provide investment, tax, legal or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.
