Gundlach: Fed's Warsh Won't Be the Easy-Money Chair Markets Wanted
Bond investor Jeffrey Gundlach warns that Kevin Warsh is unlikely to pursue the loose monetary policy many had anticipated if named Fed chair.
Bond market heavyweight Jeffrey Gundlach pushed back Monday on widespread expectations that Kevin Warsh would steer the Federal Reserve toward easier monetary policy, telling investors that Warsh is simply not going to be the accommodative Fed chair many had counted on.
Gundlach, whose DoubleLine Capital manages tens of billions in fixed-income assets, argued that Warsh's actual policy stance is more hawkish than the market narrative suggests. That positioning, in Gundlach's view, directly reduces the risk that the Fed could flood the economy with cheap money and reignite inflationary pressures that have only recently begun to cool.
Read more Central Banks Press Ahead With Rate Hikes Despite Iran Peace Hopes →
The practical consequence, according to Gundlach, is that longer-term borrowing costs are less likely to spike as a result of an overly loose Fed pivot — a scenario that had worried bond investors who feared a repeat of the inflation surge earlier this decade. A more disciplined Fed chair would, in theory, preserve the central bank's credibility and keep the yield curve from steepening sharply.
The remarks carry weight at a moment when bond markets are acutely sensitive to any signal about the Fed's next leadership and direction. Speculation about Warsh has been tied to broader debates over whether the Trump administration favors a chair who would aggressively cut rates, and Gundlach's assessment serves as a corrective to that assumption, suggesting investors may need to reprice their expectations accordingly.
Continue reading at US Top News and Analysis
