Jeffrey Gundlach Reportedly Says This Is The Maximum Number Of Fed Rate Cuts ‘You Can Possibly Think About’ This Year

According to a CNBC report, the CEO of DoubleLine Capital noted that long-duration Treasury yields have more room to rise and highlighted that the benchmark 10-year Treasury yield has already risen almost 85 basis points since the Fed announced its first rate cut.

DoubleLine Capital CEO Jeffrey Gundlach reportedly said he expects two rate reductions by the Federal Reserve at most this year as the central bank awaits key incoming data to assess the situation.

“Maximum two cuts this year. And I mean maximum, I’m not predicting two cuts. I just think that’s the most you can possibly think about,” Gundlach said on CNBC. “At the present moment, if you had made me pick a number, I would say now one cut would be the base case and maximum two.”

In its first policy decision after Donald Trump’s return as the President of the United States and after three consecutive rate reductions amounting to a cumulative 1%, the Federal Reserve decided to keep its overnight borrowing rate unchanged at 4.25% to 4.5% on Wednesday.

The central bank observed that inflation remains somewhat elevated, the unemployment rate has stabilized at a low level in recent months, and labor market conditions remain solid.

“It’s going to be a slow process to get to a hurdle to cut rates again. … I don’t think you’re going to see a cut at the next Fed meeting,” Gundlach said, according to the CNBC report. “He’s obviously focused on the stability in the unemployment rate right now in terms of not feeling a need to cut rates.”

Gundlach also noted that long-duration Treasury yields have more room to rise. He highlighted that the benchmark 10-year Treasury yield has already risen almost 85 basis points since the Fed announced its first rate cut.

“I think that rates have not peaked on the long end,” he said. “I think rates will have another move up on the long end.”

The iShares 7-10 Year Treasury Bond ETF (IEF), which tracks the investment results of an index composed of U.S. Treasury bonds with remaining maturities between seven and ten years, has gained 0.72% year-to-date.

Equity markets have remained relatively calm after the Fed rate cut. The SPDR S&P 500 ETF Trust (SPY) has lost 0.77% in the last five days, while the Invesco QQQ Trust, Series 1 (QQQ) fell nearly 2%. However, retail sentiment on Stocktwits trended in the ‘bullish’ territories for both these ETFs.

Retail sentiment toward these ETFs, however, trended in opposite territories.

SPY has gained over 3% year-to-date, while QQQ has risen over 2..5%.

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