DoubleLine CEO Gundlach advocates for Fed rate hike in October

Jeffrey Gundlach, the billionaire bond investor who runs DoubleLine Capital, says he would support the Federal Reserve raising interest rates at its October meeting if current economic data holds steady. In a market environment where most investors spent the last two years waiting for cuts, Gundlach is making the contrarian case that the Fed needs to go the other direction. What Gundlach is actually saying During his September 8 “Gundlach Unlocked” webcast, the DoubleLine CEO laid out a case for a 50 basis point increase in the federal funds rate. A half-point hike would push the effective rate from its current range of roughly 3.63% to 3.75% up toward 4.25%. His reasoning centers on inflation dynamics that he says resemble the 1970s. Import and export price growth is running near 7%, according to Gundlach. Commodity prices have surged, with oil hovering around or above $100 per barrel. Gundlach was skeptical that the Fed would act at the September meeting, even as market-implied probabilities put the odds of a hike at 55% to 60%. But looking ahead to the October 27-28 FOMC meeting, futures markets are pricing in a 64% chance of a rate increase. His warning to the Fed was blunt: if...