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Jeffrey Gundlach: Surging US Inflation Makes It Impossible for Fed to Cut Rates at Next Meeting
Investors will not see an interest rate cut at the next Federal Reserve policy meeting, Jeffrey Gundlach, CEO of DoubleLine Capital, said. The market had originally expected two ra...
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Investors will not see an interest rate cut at the next Federal Reserve policy meeting, Jeffrey Gundlach, CEO of DoubleLine Capital, said. The market had originally expected two rate cuts this year, but inflation data simply do not support such a move. When the two-year Treasury yield is nearly 50 bps higher than the federal funds rate, a rate cut is impossible.

He noted that the Iran war has driven oil prices sharply higher, thereby pushing up US inflation. After US inflation hiked 3.8% in April, he expected the upward trend to continue, forecasting that the next inflation reading will start with a "4" handle.

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As for the stock market, he said that if the Fed continues to fail to address inflation, equities will keep surging. However, he cautioned that the market itself carries certain risks, with valuations extremely high and speculation intense, even though corporate earnings have consistently far exceeded expectations, further fueling speculative momentum.

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