亚历山大·萨文科夫 Jeffrey Gundlach, also known as the “Bond King,” has predicted that the Federal Reserve will soon cut interest rates a lot. He said that this is a sign that there might be a recession coming soon because all U.S. Treasury yields longer than two years are lower than the interest rate set by the Federal Reserve.
Fed Interest Rates Could Go Down Soon
Jeffrey Gundlach is the boss at an investment firm called Doubleline and he is also known as “The Bond King” because he was on Barron’s magazine cover for this back in 2011. His wealth is estimated to be $2.2 billion according to Forbes. Recently, Jeffrey made a prediction – he said that the Federal Reserve will reduce interest rates soon.
This week, even though there is a banking crisis, the Federal Reserve still said “yes” to raise interest rates by 0.25%. The Fed Chairman Jerome Powell also warned that he can make wrong decisions about 30% of the time, so you should take him saying no to cutting interest rates this year with a grain of salt.
Recently, the US Treasury’s 2-year bonds have been giving more money than their 10-year bonds. So earlier it was 107 basis points but now it has gone down to 40 basis points – which is called a “yield curve inversion”. This means that if you invest in shorter term Treasuries, then you will make more money than if you invest in longterm ones. The Doubleline executive warned: “Red alert recession signals!”
Recently, Gundlach said that the interest rate hike by the Federal Reserve would be the last increase. He also warned in February of bad results from the upcoming recession.
Elon Musk (who is the CEO of Tesla and Twitter) said on Friday that he thinks the Federal Reserve should lower interest rates very soon. Mike Novogratz, who is the head of Galaxy Digital, agrees with Elon and says that the cut in interest rates will happen much sooner than expected.
Some people think the U.S. could be heading for a recession soon. Economist David Rosenberg said it would be a major event, while Peter Schiff believes our cost of living will skyrocket. What do you think about Jeffrey Gundlach’s prediction? Let us know in the comments section below!
