Investing Pioneers
SUBSCRIBE NOW
  • Wall Street Word
  • Whale Tracker
  • Stocks
  • Gold
  • Crypto
  • Economy
No Result
View All Result
  • Wall Street Word
  • Whale Tracker
  • Stocks
  • Gold
  • Crypto
  • Economy
No Result
View All Result
Investing Pioneers
No Result
View All Result

Bond Market Signals Fed’s Rate Stance Overly Restrictive

in Wall Street Word
0
0
SHARES
51
VIEWS
Share on FacebookShare on Twitter

Amid a historic market selloff that has erased approximately $6 trillion in U.S. market value, renowned fixed income investor Jeff Gundlach suggests the Federal Reserve’s current policy stance is too restrictive. However, he doesn’t anticipate immediate rate cuts.

What Happened: Gundlach, widely known as the “Bond King,” noted Monday that the 2-year U.S. Treasury yield has dropped to exactly 3.5%, implying that markets currently view the Federal Reserve’s benchmark rate as “at least 75 basis points too high.”

However, Gundlach cautioned that rate cuts are unlikely in the near term, adding, “I do not see a single cut any time soon, unless the losses in risk assets greatly increase.”

Gundlach’s comments come as the U.S. 2-Year Treasury yield fell to 3.541%, down 3.51%, while the 10-Year yield decreased to 3.934%, down 1.43%.

As of Monday, the CME FedWatch Tool shows a 52.1% probability of a 25 bps rate cut at the May 7 Federal Open Market Committee meeting, lowering the target rate to 400–425 bps. However, there’s still a 47.9% chance the rate remains unchanged at 425–450 bps.

The bond market signals coincide with a deepening global market rout triggered by President Donald Trump‘s sweeping new tariff policies. U.S. stock futures extended losses Sunday evening, with Dow futures plunging over 1,000 points, or 3.26%, while S&P 500 and Nasdaq futures tumbled 3.73% and 4.60% respectively.

Asian markets reflected similar distress, with Japan’s Nikkei briefly triggering circuit breakers after futures fell more than 8%. Hong Kong’s Hang Seng crashed 8.81%.

The 2 year UST yield now sits at exactly 3.5%, suggesting the Fed Funds rate is at least for now viewed to be 75 basis points too high.

Yet I do not see a single cut any time soon, unless the losses in risk assets greatly increase.

— Jeffrey Gundlach (@TruthGundlach) April 7, 2025

See Also: Bill Ackman Warns Against Launching ‘Economic Nuclear War,’ Wants A 90-Day Time Out On Trump Tariffs

Why It Matters: Despite mounting market pressure, the White House has remained firm on its tariff strategy. “I don’t want anything to go down, but sometimes you have to take medicine to fix something,” Trump said Sunday.

Treasury Secretary Scott Bessent attributed the selloff to tech valuations rather than administration policy, calling it “more a MAG 7 problem than a MAGA one,” referring to market leaders including Apple Inc. (NASDAQ:AAPL), NVIDIA Corp. (NASDAQ:NVDA), and Microsoft Corp. (NASDAQ:MSFT).

Fed Chair Jerome Powell has emphasized caution regarding rate cuts despite market turmoil, stating the Fed does not need to be in a hurry while warning that Trump’s tariff package could raise inflation.

Venture capitalist Chamath Palihapitiya suggested traditional market rescue mechanisms may no longer be politically viable, noting “the bottom 50% of Americans have zero interest in the stock market.”

Read Next:

  • Odds Of 2025 Recession Soar Above 60% On Crypto-Based Polymarket As Tariff Fears Pummel Markets, Bettors Root For Emergency Rate Cut

Image via Shutterstock

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

Previous Post

S&P 500, Dow Jones On Course To Mimic Rare Consecutive Losses Not Seen Since The Great Depression: What’s Driving the Fear?

Next Post

Navigating Market Volatility with Strategic Investments

Next Post

Navigating Market Volatility with Strategic Investments

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Recent News

Antitrust Challenge Tests Google’s Market Strategies

July 5, 2025

Social Security Email Stirs Investor Concerns

July 5, 2025

Sam Altman’s New Political Stance Shakes Investor Confidence

July 5, 2025

US Air Force Suspends SpaceX Cargo Rocket Project In Pacific Over Ecological Concerns

July 5, 2025

Browse by Category

  • Artificial Intelligence
  • Business
  • Crypto
  • Economy
  • Gold
  • In Partnership with Preserve Gold
  • Partnership with InvestorPlace
  • Partnership with The Oxford Club
  • Personal Finance
  • Real Estate
  • Sponsored
  • Stocks
  • Tech
  • Wall Street Word
  • Whale Tracker

Recent News

Lockheed Martin’s Capital Efficiency Outshines Peers

July 7, 2025

Powell’s Fed Actions: Investor Uncertainty Looms Large

July 7, 2025
  • Privacy Policy
  • Terms of Use
  • CCPA Privacy Notice
  • SMS Terms

© 2025 - InvestingPioneers.com.

Welcome Back!

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In

Add New Playlist

No Result
View All Result
  • Wall Street Word
  • Whale Tracker
  • Stocks
  • Gold
  • Crypto
  • Economy

© 2025 - InvestingPioneers.com.