Gundlach Says Fed Rate Cut Unlikely at Next Meeting

DoubleLine Capital LP chief executive officer Jeffrey Gundlach said investors will not see a rate cut at the next Federal Reserve policy meeting. Gundlach stated that people had expected two rate cuts this year, but inflation data has not supported that outlook. He pointed to the two-year Treasury yield being nearly 50 basis points above the federal funds rate as a key constraint.

U.S. inflation readings. 8 percent in April, the fastest pace since May 2023, according to Gundlach. DoubleLine models indicate the next headline CPI reading will begin with a four, he said.

Gundlach described the stock market as remarkably strong despite the inflation environment. He said the market is expensive and speculative, yet corporate earnings continue to exceed expectations. He renewed warnings about the private credit sector, stating he is concerned that sponsors continue to seek additional assets under management.