“It will continue to be an interesting political cycle, but if you think this is a crazy cycle, my forecast four years from now will make this look like child’s play,” Gundlach said, explaining that many key budgetary and economic questions, like the future of Social Security, will have to be settled in the context of the 2020 election
The Federal Open Market Committee will meet next week to decide whether a rate increase is warranted. The market, on the other hand, is not predicting a rate hike until September at the earliest.
“We entered the year with a 50 percent chance of the Fed raising the rates in March,” Gundlach says. “On Feb. 11, the probability of a rate hike any time between now and November hit zero. I think it would be dicey to raise rates again, even though some of the indicators have markedly improved.”