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Jeffrey Gundlach speaking at the 2019 SOHN Conference in New York on May 6, 2019.
Adam Jeffery | CNBC
DoubleLine Capital CEO Jeffrey Gundlach said Wednesday he expects only one rate cut for 2025 — two reductions at most — as the Federal Reserve patiently awaits incoming data to assess the state of the labor market and inflation.
“Maximum two cuts this year. And I mean maximum, I’m not predicting two cuts. I just think that’s the most you can possibly think about,” Gundlach said on CNBC’s “Closing Bell.” “At the present moment, if you had made me pick a number, I would say now one cut would be the base case and maximum two.”
The central bank kept interest rates unchanged Wednesday after three consecutive cuts to end 2024. Fed Chair Jerome Powell emphasized that the central bank is in no hurry to adjust its policy stance, particularly as the economy remains strong.
“It’s going to be a slow process to get to a hurdle to cut rates again. … I don’t think you’re going to see a cut at the next Fed meeting,” Gundlach said. “He’s obviously focused on the stability in the unemployment rate right now in terms of not feeling a need to cut rates.”
The notable fixed income investor thinks long-duration Treasury yields have more room to rise. He noted that the benchmark 10-year rate has increased about 85 basis points since the Fed cut rates for the first time last year.
“I think that rates have not peaked on the long end,” he said. “I think rates will have another move up on the long end.”
Gundlach cautioned against owning high-risk assets right now because of his view on long-term interest rates and his observation that valuations are high.