Jeffrey Gundlach says the bond market is telling Warsh the Fed has to start acting on inflation

📰 source: cnbc_topnews · 💼 business

jeffrey gundlach of doubleline capital said the treasury market is telling the fed it needs to actually raise rates to get to 2% inflation, not just talk. he spoke on cnbc after the fed's latest decision, saying getting to 2% will take a long time, maybe not in the next couple years.

the fed left rates unchanged at 3.5% to 3.75%, but three members dissented favoring a quarter-point hike. gundlach noted that the two-year yield fell while long-term yields rose, showing skepticism. the 10-year yield rose 7 basis points to 4.681%, the 30-year surged to 5.213% — its highest since 2007 — while the two-year fell 3 basis points to 4.244%.

fed chair kevin warsh said they will act if necessary, but markets seem to doubt the commitment. the long-end move reflects concerns about inflation and deficits, while the short-end sees a slower pace of tightening.

why it matters: bond market divergence signals fed credibility gap on inflation fight, with long yields surging as investors demand action.

source: cnbc_topnews
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