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"Should have subdued it at once and watched... Underestimated inflation risk"
US 10-year and 2-year Treasury yields surge
Jeffrey Gundlach, CEO of DoubleLine Capital, an influential bond investor on Wall Street, claimed on the 16th (local time) that the Federal Reserve's (Fed) decision to raise the benchmark interest rate by 0.25 percentage points did not sufficiently reflect the severity of inflationary pressures.
In an interview with CNBC on the same day, CEO Gundlach stated that the Fed should have raised the benchmark interest rate by 0.50 percentage points, not 0.25 percentage points.
He criticized the situation as "stun and done," arguing that the Fed should have firmly imprinted a hawkish stance and adjusted market expectations with one bold shock.
He emphasized the need for proactive and strong measures, saying, "They should have just done 50bp (1bp=0.01 percentage points) and watched how the data came out."
He also pointed out that the US inflation problem is still "not being taken seriously enough."
CEO Gundlach also assessed that Fed Chairman Kevin Warsh's press conference was "quite poor" and that the central bank chief's explanation was "opaque."
Regarding Chairman Warsh's movements, such as forming a task force (TF) with external personnel to improve the efficiency of Fed operations, he said, "It's like a company in financial distress trying to hire consultants."
He indirectly criticized the Fed's communication style and leadership, saying, "Consultants always figure out what the company people really want to hear, and then they just tell them what they want to hear."
After the Fed's benchmark interest rate hike and Chairman Warsh's press conference on this day, US Treasury yields rose.
The US Treasury yield, a global interest rate benchmark, was 5.025% as of 5 PM on the same day, up 2.9bp (1bp=0.01 percentage points) from the previous close.
The 2-year US Treasury yield, sensitive to monetary policy, rose 7.7bp to 3.868%.
The 30-year US Treasury yield remained unchanged at 5.363%.
Since bond yields and bond prices move inversely, a rise in Treasury yields means a decrease in prices.
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