Gundlach Says Bond Market Set to Rally as Fed Raises Rates

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  • Inflation will slow later this year, driving up bond prices
  • DoubleLine CEO says Fed isn’t behind the curve this time

DoubleLine Capital CEO Jeffrey Gundlach Interview

The bond market is poised for a short-term rally as the Federal Reserve enters a series of interest rate hikes that will moderate inflation, Jeffrey Gundlach, chief executive officer of Los Angeles-based DoubleLine Capital, said on CNBC.

“I think the bond market is set up for a rally coming up in the weeks ahead,” Gundlach said.

The Fed may be returning to a series of “almost old school” rate hikes that will continue “until something breaks,” Gundlach said on an investor webcast last week. The money manager, whose firm oversaw about $101 billion in assets as of Dec. 31, also said he doesn’t foresee a U.S. recession in the near term.

The Fed is expected to raise rates today for the first time this year and only the third time in a decade. The central bank moves show that it isn’t behind the curve in trying to control inflation, Gundlach said on Wednesday.

Yields on 10-year Treasuries rose in intraday trading after Gundlach’s comments, which aired after 12:30 p.m. in New York.

Yields on 10-year Treasuries are likely to head back down as inflation moderates later this year, Gundlach said.

“With that movement, that supports a bond market rally,” he said.

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