Gundlach Unlocked: The Fed’s Next Move

DoubleLine CEO-CIO Jeffrey Gundlach’s latest Gundlach Unlocked webcast reviews the macroeconomic landscape heading into next week’s Federal Open Market Committee meeting. Mr. Gundlach remains skeptical that the Federal Reserve will hike rates despite the market pricing a real probability of one, and he warns that a hold could push long-term rates meaningfully higher given persistent inflation pressure. Mr. Gundlach also flags a growing divergence in credit markets, with spreads on AI-related corporate bonds widening sharply even as the broader market holds near its tights for the year.

On inflation, he points to several troubling data points, from rising import and export prices to a CPI trajectory Mr. Gundlach says looks eerily similar to the setup that preceded the inflation spiral of the 1970s. On equities, he reiterates his warning about historic market concentration and continues to favor a more equal-weighted approach rather than through the capitalization-weighted S&P 500 Index. He closes bearish on the U.S. dollar and constructive on both emerging markets equities and local currency debt, while he cautions that the U.S. Treasury Department’s newly announced buyback program is unlikely to meaningfully move long-term U.S. Treasury yields.