UBS On-Air: Market Moves Back to School on the Markets with Jeffrey Gundlach, Founder, DoubleLine Capital
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Sep 29, 2025 Join Jeffrey Gundlach, CEO and Chief Investment Officer of DoubleLine Capital, as he dives into the complex landscape of markets and monetary policy. He discusses how tariffs might hinder the Fed's inflation goals and the vital role of the two-year Treasury in shaping rate decisions. Gundlach shares insights on the impact of political dynamics on future Fed policies and highlights significant economic indicators that could signal recession risks. He also advocates for local-currency emerging market bonds and emphasizes the importance of gold and real assets in current portfolios.
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Tariffs Will Complicate Fed's Inflation Fight
- Tariffs likely add about 0.5% to headline CPI and will complicate the Fed's path to 2% inflation.
- The Fed follows the two-year Treasury yield closely, so two-year movement is key to policy expectations.
Two-Year Treasury Drives Fed Expectations
- The two-year Treasury yield has historically led Fed policy and currently sits well below the funds rate.
- That spread is a major reason markets price further Fed cuts despite rising inflation readings.
Favor Shorter Bond Durations
- Avoid long-duration Treasuries and prefer 3–5 year duration for now due to inflationary pressure and heavy issuance.
- Be prepared to reintroduce long bonds only if the government enacts yield-curve control or intervenes.