Gundlach Doesn’t Think the Fed Will Resume Rate Hikes Soon

(Bloomberg) — DoubleLine Capital’s Jeffrey Gundlach doesn’t believe the Federal Reserve will continue to raise interest rates anytime soon despite Fed Chair Jerome Powell signaling the resumption of monetary tightening.

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“It was definitely hawkish in the rhetoric, but not hawkish in the action,” Gundlach told CNBC in an interview, following the Federal Open Market Committee’s decision to hold its benchmark rate for the first time in 15 months.

Gundlach believes the Fed is in an “okay” place right now, but thinks the central bank may have overtightened a little already.

“I see a trend here, and I don’t think the Fed’s going to be raising interest rates again,” said the DoubleLine co-founder, who argues that recent labor data suggests the economy wasn’t as strong as many believe.

“There was growth in jobs, but there was a significant decrease in average hours worked,” he said, noting that the latest reading for the manufacturing purchasing managers’ index is also “massively recessionary.”

Gundlach is also skeptical of the S&P 500 index rally, attributing its recent bull run to a handful of companies whose shares were boosted by the hype over artificial intelligence. For the remaining companies in the benchmark, there’s “little tailwind.” he said.

“The stock market, frankly, is exhibiting signs of mania where you have a concentrated part of the market driving the entire train,” he said, adding that the S&P 500 was “really overvalued.”

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