Bond king Jeffrey Gundlach says he expects one more Fed rate hike

DoubleLine Capital CEO Jeffrey Gundlach said helium sees 1 further complaint hike from the Federal Reserve earlier the cardinal slope ends its tightening cycle.

"I deliberation 1 more," Gundlach said Wednesday connected CNBC's "Closing Bell: Overtime." "I deliberation it's pugnacious to marque the connection 'ongoing increases' with an 's' astatine the extremity of the connection 'increase' and bash zero unless you had precise important alteration successful economical conditions."

The Fed on Wednesday raised its benchmark involvement rate by a 4th percent point, taking its people scope to 4.5%-4.75%, the highest since October 2007. The Fed's connection included connection noting that the cardinal slope inactive sees the request for "ongoing increases successful the people range."

The alleged enslaved king said Fed Chairman Jerome Powell had a "clarifying" connection astatine the property league Wednesday, saying the existent yields are affirmative crossed the curve. Gundlach said helium was referring to the Treasury Inflation-Protected Securities (TIPS), whose yields person stopped their ascent.

"He's looking astatine the TIPS market, which had a immense summation successful yields past year. That was a large headwind for hazard assets successful the banal market," Gundlach said. "They've stopped going up and I person a feeling that existent yields are going to not spell up successful the archetypal portion of this year. So that keeps a small spot of runway, I think."

Stocks staged a large comeback successful January, led by beaten-down exertion names. The S&P 500 rallied 6.2% successful January, notching its champion commencement of the twelvemonth since 2019. The tech-heavy Nasdaq Composite jumped 10.7% past period for its champion monthly show since July.

In Powell's property conference, the Fed main said the cardinal slope could behaviour a fewer much complaint hikes to bring ostentation down to its target.

"We've raised rates 4 and a fractional percent points, and we're talking astir a mates of much complaint hikes to get to that level we deliberation is appropriately restrictive," Powell said. "Why bash we deliberation that's astir apt necessary? We deliberation due to the fact that ostentation is inactive moving precise hot."

Asked if Gundlach sees the Fed cutting rates this year, helium said it's a coin flip, depending connected the incoming ostentation data.

"I benignant of deliberation that they'll chopped rates successful the 2nd fractional of the year, but I'm not truly committed to that thought firmly astatine all," Gundlach said.

The wide followed capitalist besides said helium believes the likelihood for a recession this twelvemonth person decreased, but they are inactive supra 50%.