"New Bond King" Gundlach: "4% Inflation" is Coming, Fed Rate Cuts Are Unlikely

According to Mars Finance, on May 18th, Jeffrey Gundlach, CEO of DoubleLine Capital LP and known as the "New Bond King," stated on Fox News' "Sunday Morning Futures" that investors will not see an interest rate cut at the next Federal Reserve policy meeting. "In my view, when the two-year Treasury yield is nearly 50 basis points higher than the federal funds rate, a rate cut is simply impossible," Gundlach said. He added that Kevin Warsh, who was recently confirmed as the Fed Chairman, took the position during a "difficult time." Due to the war with Iran pushing up oil prices, which in turn affected US inflation reports, Gundlach predicted that the upward trend would continue after the Consumer Price Index (CPI) jumped 3.8% in April (the fastest pace since May 2023). Gundlach stated that DoubleLine Capital's model shows that "the next reading for the overall CPI will begin with a '4'." Regarding the stock market, Gundlach stated that "the market (valuation) is very expensive and highly speculative, but earnings continue to rise beyond expectations, which fuels the speculative frenzy."