Let's welcome DoubleLine Capital's CEO, CIO, and founder, Jeffrey Gundlach. Welcome back to what's become a

tradition, and I'm glad to have you, Jeffrey.

Good to be here, Scott. Your reaction on what you just heard and what

the Fed did? Well, there's a lot more confusion now than there was a couple of months ago, um, regarding the future path, but the

squaring of the 2-year treasury yield and the Fed funds rate is now complete. I talked several months ago about the

Fed being behind the curve and needing to get aggressive in getting more in line with the two-year treasury, but now the

2-year treasury is at 4.35 and the Fed funds rate is at 4.38, if you take the middle of the range,

so they're exactly there. Underneath the surface, though, uh, there were a couple of problems. The first thing he said at

the beginning of his press conference, as always, is they're squarely focused on their dual mandate, and then he used the

word "cooling" for the labor market, and he pointed out that it's looser than it was pre-pandemic. So that seems to be not

trending quite the way they might want. And at the same time, he said, uh, uncertainty regarding inflation is

clearly higher. In fact, I think he let something slip on an ad-lib, and I think he said—let's see—he said the forecast

from a few months ago on inflation seems to have fallen apart. I think are the words that he used. So what we have now

is a neutral rate versus the 2-year treasury, yet the dual mandate that they're squarely focused on is not

exactly trending in the perfect direction. Uh, the inflation data points have not improved since the

September meeting. Um, about—we follow about 30 different inflation primary inputs, and the number that are showing

Accelerating inflation in the several quarters ahead has increased since September. Also, what's very interesting about what's happened over the past...

really a very aggressive cutting cycle. I mean, they've cut 100 basis points in 3 months, so that's a 400 basis point

annual rate. And if you go back over all these Fed cutting cycles going back to 1984—so going back 40 years—this is the

first time that after the first cut in the Fed funds rate that interest rates have gone up and not down. The 10-year

Treasury yield is up by 80 basis points from September 18th, and usually the yield falls on the 10-year Treasury once

you go into a Fed hiking cycle. So the takeaway that I got from that press conference was there's not going to be

an aggressive cutting cycle as a base case in 2025. Obviously, the market went from four implied Fed rate cuts in

2025 to now the Fed's down at two, and the market is pretty much in sync with that—much slower rate cuts. And of

course, risky assets and a very highly valued stock market don't like the idea that rate cuts are less likely on sort

of both sides of the mandate. Our intention with the path that was so comfortably in place per the press

conferences in the mid-part of this year—that confidence just isn't where it used to be. So I think the

Fed is now extraordinarily data dependent as we enter 2025. I know they're always data dependent, but at

this juncture, it's very—it's critical that we watch that unemployment rate, which Fed Chair Powell said that job creation

is not high enough to keep the unemployment rate steady. So the base case is that rates are going in the, you know,

up direction, which is not the direction they want. And at the same time, some inflationary primary inputs are suggesting that we're

Not going to get to 2%. I thought the last question asked in the press conference was a perfect ending.

Kind of, is it really? Is it good enough to be at 2.5% inflation? Do we

have to give up on 2% inflation? You know, are we... is where we are the best we're

going to get? And my takeaway from that press conference is the short answer to that is yes. I think that we're not

likely to get to 2% inflation in 2025, and the Fed says so themselves. In fact,

we'll probably start having inflationary pressures towards the middle of 2025, and the headline CPI rate

will probably not be below 2.5% when the inflation rate starts heading up towards three. Now, obviously,

all these things can change. We don't have great visibility on the second half of 2025, but unless the price of energy

falls, which is possible with "drill, drill, drill" being the rhetoric of the incoming Trump administration, we'll see.

But oil prices have been remarkably stable, and that's the real wild card: if they were to go up for whatever

reason, we would start to see significant inflation risk, and there'll be no Fed cuts in 2025 if that's the case.

채권왕 건들락, 이제 금리 인하는 없다? (번역맨 에릭)

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