Bond investor Jeff Gundlach on Fed's rate pause: 'What are you waiting for?' — SkimNews
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- Jeff Gundlach asked “What are you waiting for?” after Kevin Warsh described a strong macroeconomic environment, arguing headline CPI was headed to 4% and the commodity index was rising in a bull market.
- Federal Reserve left its overnight rate at 3.75%-4% after a 25-basis-point September hike; Gundlach said the rate was significantly below the roughly 4.7% two-year Treasury yield, leaving the Fed behind the curve.
- CME FedWatch put the odds of a 25-basis-point December rate hike at 85%, while Gundlach said that absent a crack in oil prices, “they have to hike in December”; U.S. oil traded above $100 per barrel Wednesday.
- Kevin Warsh reiterated that future rate decisions could not be determined at that time and said one 2027 meeting and two 2028 meetings among eight scheduled gatherings would focus on policy strategy without a fed-funds-rate vote.
- Jeff Gundlach kept his allocation unchanged at 30% equities, 30% bonds, 20% commodities and 20% “dry powder,” favoring the equal-weight S&P 500 to limit exposure to potential artificial-intelligence problems.
- Jeff Gundlach said eight Fed meetings were unnecessary and favored six rate-setting meetings immediately, arguing that the current schedule leaves too little time to filter incoming data.
Why it matters: For bond investors, the December decision is the material issue: CME’s FedWatch puts an 85% chance on a 25-basis-point hike, and Gundlach says oil above $100 leaves the Fed little reason to wait. His unchanged 30% bond allocation shows the pause did not soften his stated rate case.
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