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"Overall, Gundlach said it is "unthinkable" to raise rates with junk bonds and leveraged loans struggling so much.High Yield bonds rated CCC are currently at multi-year lows, down more than 20 percent from their peak in June 2014.
Despite soft growth in the U.S. and weakening global growth, the Fed is "hell bent" on raising interest rates because it has said in many speeches that it would do so, Gundlach says. "It's possible the Fed pulls another Lucy and the football," Gundlach said, referring to Peanuts character Lucy yanking a football away from Charlie Brown.
Gundlach said market turmoil would be the main factor that delays a hike by the Fed next week, its first in nearly a decade. "If the Fed hikes, it will be a different world," he added.The Fed could end up looking like Sweden's Riksbank, which hiked back in 2010 and 2011 only to have to quickly reverse and quickly slash rates, Gundlach said. The Fed "philosophically" wants to raise interest rates and will use "selectively back-tested evidence" to justify an increase in rates, he added."
"Overall, Gundlach said it is "unthinkable" to raise rates with junk bonds and leveraged loans struggling so much.High Yield bonds rated CCC are currently at multi-year lows, down more than 20 percent from their peak in June 2014.
Despite soft growth in the U.S. and weakening global growth, the Fed is "hell bent" on raising interest rates because it has said in many speeches that it would do so, Gundlach says. "It's possible the Fed pulls another Lucy and the football," Gundlach said, referring to Peanuts character Lucy yanking a football away from Charlie Brown.
Gundlach said market turmoil would be the main factor that delays a hike by the Fed next week, its first in nearly a decade. "If the Fed hikes, it will be a different world," he added.The Fed could end up looking like Sweden's Riksbank, which hiked back in 2010 and 2011 only to have to quickly reverse and quickly slash rates, Gundlach said. The Fed "philosophically" wants to raise interest rates and will use "selectively back-tested evidence" to justify an increase in rates, he added."
[text] Jeff Gundlach: Junk Bond Market is Too Weak, the Fed is Crazy for Wanting to Raise Rates | Reuters
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