'Bond King' Jeff Gundlach doesn't think a US 'non-recession' is very likely as soaring home and gas prices threaten US growth

'Bond King' Jeff Gundlach doesn't think a US 'non-recession' is very likely as soaring home and gas prices threaten US growth
US gas prices have soared to a record $5 this month.Mike Blake/Reuters
  • "Bond King" Jeff Gundlach said a recession is highly probable for the US economy.
  • He also expressed doubts the Fed will be able to pull off a soft landing as inflation rages on.

Billionaire investor Jeff Gundlach believes the US economy is heading into more turmoil with a recession likely on the cards.

Speaking on CNBC, Gundlach said: "If you think things are going to get worse by raising interest rates to fight inflation, your intention is to make things worse. I just don't think the non-recession case has much of a probability."

The Federal Reserve Wednesday raised interest rates by 75 basis points to 1.75%, marking its largest rate hike since 1994 to combat raging inflation. But Gundlach, a fixed-income investor, doesn't think it was enough to bring consumer prices down to the target 2%.

Inflation rose by 8.6% through May, accelerating at a faster pace than economists predicted. It is the highest rate since December 1981 as food and fuel prices soar, in part due to Russia's war in Ukraine.

Gundlach however, tweeted prior to the Fed's decision, that the benchmark interest rate should in fact be lifted to 3%, calling for a much greater hike than what most industry experts or economists suggest.


The DoubleLine CEO - who is nicknamed the "Bond King" - also made a case for a weak US economy during his interview, saying it was startling to hear that people think it's strong.

"It's ear-catching, frankly, that everyone keeps talking about how wildly strong this economy is. GDP was negative in the first quarter, and GDP now for the second quarter is at zero and it's been trending in a southward direction for the last few months. So, where is the strong economy?"

He continued, referring to the risks to the housing market, where rising borrowing rates have cut mortgage applications dramatically. "Housing has become extremely less affordable," Gundlach said, adding that "it's pretty obvious that these higher mortgage rates, which have doubled in just the past several months, are going to cut into things."

It comes on the back of soaring gas prices, Gundlach said, where the average price per gallon of fuel has rocketed past a record $5.

Against this backdrop, Gundlach said he ultimately thinks the Fed won't be able to navigate a soft landing, whilst also labeling Chair Jerome Powell a short-termist. "What I took from (Powell's) comments is that he's becoming very short-termist, data-dependent, looking at everything all the time," he said.