Gundlach says Trump is 'being crazy like a Fox' to blame the Fed for the market sell-off and explains why interest rates will keep rising

Jeffrey Gundlach. Photo: David A. Grogan/ CNBC/ NBCU Photo Bank via Getty Images.
  • Jeff Gundlach, the CEO of DoubleLine Capital, said Thursday that President Donald Trump was “being crazy like a fox” for his rhetoric on the Federal Reserve.
  • Amid the worst stock-market sell-off of his presidency, Trump had said the Fed was “going loco” by continuing to raise interest rates.
  • Gundlach said the Fed has entered auto-pilot mode, and would need to see weakness in the economy to stop raising rates.

Count Jeff Gundlach among the investors who are not on board with President Donald Trump’s attacks on the Federal Reserve.

This week, amid the longest stock-market sell-off of his presidency, Trump has described the central bank as “crazy” and “going loco” for raising interest rates. Bonds and stocks have sold off since last week Thursday as investors fear the impact of higher borrowing costs on financial conditions.

“When it comes to President Trump, it’s clear to me that he’s being crazy like a fox with his Fed rhetoric,” Gundlach, the CEO of DoubleLine Capital, said in a CNBC interview on Thursday.

He added that the Fed needed to see a material decline in the economic data before it stopped raising rates.

“As long as inflation stays above 2%, as long as the markets don’t throw too big of a fit, and as long as the inflation rate is in the mid-2s, I can see the Fed continuing to tighten,” Gundlach said.

“We’re in the place now – that auto-pilot place – where you need the data to change to the downside.”

Fed Chairman Jerome Powell said in September that the central bank did not “consider political factors or things like that.”

Gundlach agreed that interest rates were partly responsible for the market sell-off. As yields rose in September, he made the prescient call that the 30-year bond closing above the key resistance level of 3.25% for two days in a row would be a “game changer” for markets.

He said on Thursday that rates were likely to head higher.

“If you look at the charts and the way the market is behaving, and you think about the trends that are underneath the bond market, it wouldn’t be surprising at all to see the 30-year go to 4% before this move of the breakout above 3.25 is over,” he said.

“And the curve should probably steepen. Maybe the 10-year Treasury makes it to 3.50 or 3.60 during that move.”

The 10- and 30-year yields were at 3.14% and 3.31% at 2:46 p.m. ET on Thursday.

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