The U.S. economy will enter recession in the coming months, Jeff Gundlach, head of investment company DoubleLine Capital, said on CNBC.
According to Gundlach, only a rise in unemployment is needed for a recession to begin under current conditions. The Federal Reserve (Fed) will need to take “very decisive” action, he believes, and expects the regulator to lower interest rates this year.
Since March 3, the two-year U.S. Treasury yield has fallen about 100 basis points to 4.078%. Until it recovers, the Fed won’t raise rates, Gundlach believes.
The Fed has been tightening monetary policy throughout the year. As Bloomberg notes, this forces investors to reallocate capital in favor of cash and instruments with yields higher than deposit rates, including Treasury bills and units of money market funds.
