Gundlach Thinks A Recession’s Likely in 2023

(Bloomberg) — Sign up for the New Economy Daily newsletter, follow us @economics and subscribe to our podcast.

Most Read from Bloomberg

Jeffrey Gundlach, the CEO of DoubleLine Capital, does not have a base case of a recession this year but thinks there could be one in 2023 as the Federal Reserve is behind the curve in pulling off a soft landing.

Speaking to CNBC, Gundlach said the Fed’s Wednesday announcement of an interest rate hike is merely them “following” the two-year Treasury, adding that they were “way behind.”

“We have an incredibly flat yield curve given where we are in terms of the absolute rate level and the inflation level,” he said.

Stocks are oversold and will go higher in the immediate term but will roll over once a couple more rate hikes are in place, Gundlach added.

The billionaire fund manager expects inflation to be sticky even though price pressures may ease. He sees 2022 inflation coming in lower from a year ago in the “high 5%” but not at the level the Fed is forecasting.

Fed Lifts Rates a Quarter Point and Signals More Hikes to Come

Most Read from Bloomberg Businessweek

©2022 Bloomberg L.P.