Jeff Gundlach says the Fed should have hiked rates by more to fight rising inflation — SkimNews
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- Jeff Gundlach, founder of DoubleLine, said the Fed should have hiked rates by 50 basis points instead of the quarter point delivered Wednesday, calling it 'stun and done' on CNBC's 'Closing Bell.'
- Gundlach argued a half-point hike would have provided a 'truing up' to the Fed funds rate, noting the 2-year Treasury yield was more than 100 basis points above the Fed funds rate before the decision.
- The 2-year U.S. Treasury yield climbed around 7 basis points in Wednesday afternoon trading as Gundlach made the case for larger hikes.
- Gundlach said the 2-year Treasury 'leads' the Fed, a hypothesis he said Wednesday's market action proved correct, and reiterated that the U.S. inflation problem may not be 'fully respected.'
- Kevin Warsh's post-decision press conference drew sharp criticism from Gundlach, who called the content 'pretty thin' and the Fed chair 'opaque,' saying he was not surprised stocks sold off during the event.
- The Dow Jones Industrial Average fell 700 points in late afternoon trading, with losses accelerating during and after Warsh's press conference.
- Gundlach dismissed Warsh's push to bring in task forces to evaluate Fed operations, likening it to 'a company that's having trouble that wants to hire consultants' who 'tell them what they want to hear.'
Why it matters: Gundlach's critique lands at a moment when the 2-year Treasury sits over 100 basis points above the Fed funds rate — a gap suggesting bond traders are pricing in tighter policy than the Fed has delivered. His public call for a 50-basis-point move and his labeling of Chair Warsh as 'opaque' sharpen the pressure on a central bank that watched the Dow shed 700 points during its own post-decision press conference.
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