Traders Boost Bets on Just One 2025 Fed Cut Ahead of CPI Data
Traders are increasingly betting that the Federal Reserve will cut interest rates only once this year amid signs of resilient growth and sticky inflation.
Wednesday brings US consumer-price data for May, which is forecast to show a pickup that may reinforce the Fed's wait-and-see stance toward further easing as it assesses the impact of tariffs. The central bank is widely projected to hold rates steady next week, and futures and options tracking expectations for its policy path show traders are moving to unwind the rate-cut premium built into the months ahead.
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Yahoo
26 minutes ago
- Yahoo
DoubleLine's Gundlach Says ‘Reckoning Is Coming' for US Debt
(Bloomberg) -- America's debt burden and interest expense have become 'untenable,' a situation that may lead investors to move out of dollar-based assets, according to DoubleLine Capital's Jeffrey Gundlach. Shuttered NY College Has Alumni Fighting Over Its Future Trump's Military Parade Has Washington Bracing for Tanks and Weaponry NYC Renters Brace for Price Hikes After Broker-Fee Ban NY Long Island Rail Service Resumes After Grand Central Fire Do World's Fairs Still Matter? 'There's an awareness now that the long-term Treasury bond is not a legitimate flight-to-quality asset,' the veteran bond manager said Wednesday in an interview at the Bloomberg Global Credit Forum in Los Angeles. A 'reckoning is coming.' In a wide-ranging discussion that also touched on gold's attractiveness, stretched market valuations, the state of private credit, artificial intelligence and long-term investment opportunities in India, Gundlach said investors should consider increasing their non-dollar-based holdings, adding that his firm was starting to introduce foreign currencies into its funds. His comments came a day before a closely watched auction for 30-year Treasury bonds. Gundlach, 65, likened today's market to the environment in 1999, just before the dot-com bust, as well as 2006 and 2007 before the global financial crisis. Going further, he said the booming private credit sector is analogous to the market for collateralized debt obligations, or CDOs, in the mid-2000s, 'where there's just tremendous issuance, there's tremendous acceptance.' The investor noted that public credit markets have outperformed their private counterparts in recent months, and sees 'overinvestment' — and a risk of forced selling — in the latter. 'I just don't think the excess reward is anything close to what it used to be,' Gundlach said. He cited possible selling of private assets by US institutions such as Harvard University, which has explored offloading part of its endowment's private equity holdings as the Trump administration cuts off grants and funding. Gundlach founded DoubleLine in 2009 after a contentious exit from TCW, where he'd become a star bond manager. DoubleLine managed $93 billion in assets and had more than 250 employees as of March. The firm and its founder haven't shied away from bold takes. Gundlach, who called Donald Trump's first presidential win in 2016, gave the Federal Reserve an F grade in September for its response to the economy as he correctly predicted a half-point rate cut, and earlier this year the firm posed an open question of whether Microsoft Corp. debt was safer than Treasuries. Next Stop 6%? As for Treasury debt, Gundlach said yields on long-term bonds could continue to rise as the economy starts to weaken. If yields reached 6%, that could prompt the Federal Reserve to step in and start quantitative easing, buying long-term Treasuries to rein in borrowing costs. DoubleLine and peers including Pacific Investment Management Co. and TCW Group Inc. have been avoiding the longest-dated US government bonds in favor of shorter maturities that carry less interest-rate risk in the face of spiraling federal debt and deficits. US 30-year yields touched a near two-decade high of 5.15% last month, and traded at around 4.9% on Thursday. In a telling sign, yields on the long-term benchmark are higher year to date, even as rates on shorter-term Treasuries have fallen. While known for his fixed-income calls, Gundlach has grown more bullish on gold, doubling down on its status as a 'real asset class' and one that is 'no longer for lunatic survivalists' and speculators. 'We have a tremendous paradigm shift where money is not coming into the United States, and gold is suddenly the flight to quality asset,' he said. Gundlach previously predicted that the price of gold would shatter records, as happened this year, and in May, he told CNBC that the precious metal could swell to $4,000 per ounce, up from about $3,350 now. He also pointed to India as one of the 'most bankable' long-term investment opportunities. 'The way to invest in periods like this is to go with long-term themes,' Gundlach said. 'It might take 30 years, but you should invest in India because it has a similar profile today that China had 35 years ago.' --With assistance from Elizabeth Campbell, Loukia Gyftopoulou and Michael Mackenzie. (Adds the 30-year Treasury auction in the third paragraph.) New Grads Join Worst Entry-Level Job Market in Years American Mid: Hampton Inn's Good-Enough Formula for World Domination The Spying Scandal Rocking the World of HR Software The SEC Pinned Its Hack on a Few Hapless Day Traders. The Full Story Is Far More Troubling Cavs Owner Dan Gilbert Wants to Donate His Billions—and Walk Again ©2025 Bloomberg L.P. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Fast Company
39 minutes ago
- Fast Company
How Trump's ‘Big Beautiful Bill' threatens to make U.S. energy dirtier and more expensive
When it comes to energy policy, the ' One Big Beautiful Bill Act '—the official name of a massive federal tax-cut and spending bill that House Republicans passed in May 2025 —risks raising Americans' energy costs and greenhouse gas emissions. The 1,100-page bill would slash incentives for green technologies such as solar, wind, batteries, electric cars, and heat pumps while subsidizing existing nuclear power plants and biofuels. That would leave the country and its people burning more fossil fuels despite strong popular and scientific support for a rapid shift to renewable energy. The bill may still be revised by the Senate before it moves to a final vote. But it is a picture of how President Donald Trump and congressional Republicans want to reshape U.S. energy policy. As an environmental engineering professor who studies ways to confront climate change, I think it is important to distinguish which technologies could rapidly cut emissions or are on the verge of becoming viable from those that do little to fight climate change. Unfortunately, the House bill favors the latter while nixing support for the former. Renewable energy Wind and solar power, often paired with batteries, are providing more than 90% of the new electricity currently being added to the grid nationally and around the world. Geothermal power is undergoing technological breakthroughs. With natural gas turbines in short supply and long lead times to build other resources, renewables and batteries offer the fastest way to satisfy growing demand for power. However, the House bill rescinds billions of dollars that the Inflation Reduction Act, enacted in 2022, devoted to boosting domestic manufacturing and deployments of renewable energy and batteries. It would terminate tax credits for manufacturing for the wind industry in 2028 and for solar and batteries in 2032. That would disrupt the boom in domestic manufacturing projects that was being stimulated by the Inflation Reduction Act. Deployments would be hit even harder. Wind, solar, geothermal, and battery projects would need to commence construction within 60 days of passage of the bill to receive tax credits. In addition, the bill would deny tax credits to projects that use Chinese-made components. Financial analysts have called those provisions ' unworkable,' since some Chinese materials may be necessary even for projects built with as much domestic content as possible. Analysts warn that the House bill would cut new wind, solar, and battery installations by 20% compared with the growth that had been expected without the bill. That's why BloombergNEF, an energy research firm, called the bill a ' nightmare scenario ' for clean energy proponents. However, one person's nightmare may be another man's dream. 'We're constraining the hell out of wind and solar, which is good,' said Representative Chip Roy, a Texas Republican backed by the oil and gas industry. Efficiency and electric cars Cuts fall even harder on Americans who are trying to reduce their carbon footprints and energy costs. The bill repeals aid for home efficiency improvements such as heat pumps, efficient windows, and energy audits. Homeowners would also lose tax credits for installing solar panels and batteries. For vehicles, the bill would not only repeal tax credits for electric cars, trucks, and chargers, but it also would impose a federal $250 annual fee on vehicles, on top of fees that some states charge electric-car owners. The federal fee is more than the gas taxes paid by other drivers to fund highways and ignores air-quality and climate effects. Combined, the lost credits and increased fees could cut projected U.S. sales of electric vehicles by 40% in 2030, according to modeling by Jesse Jenkins of Princeton University. Nuclear power Meanwhile, the bill partially retains a tax credit for electricity from existing nuclear power plants. Those plants may not need the help: Electricity demand is surging, and companies like Meta are signing long-term deals for nuclear energy to power data centers. Nuclear plants are also paid to manage their radioactive waste, since the country lacks a permanent place to store it. For new nuclear plants, the bill would move up the deadline to 2028 to begin construction. That deadline is too soon for some new reactor designs and would rush the vetting of others. Nuclear safety regulators are awaiting a study from the National Academies on the weapons proliferation risks of the type of uranium fuel that some developers hope to use in newer designs. Biofuels While cutting funding for electric vehicles, the bill would spend $45 billion to extend tax credits for biofuels such as ethanol and biodiesel. Food-based biofuels do little good for the climate because growing, harvesting, and processing crops requires fertilizers, pesticides, and fuel. The bill would allow forests to be cut to make room for crops because it directs agencies to ignore the impacts of biofuels on land use. Hydrogen The bill would end tax credits for hydrogen production. Without that support, companies will be unlikely to invest in the seven so-called hydrogen hubs that were allocated a combined $8 billion under the Bipartisan Infrastructure Law in 2021. Those hubs aim to attract $40 billion in private investments and create tens of thousands of jobs while developing cleaner ways to make hydrogen. The repealed tax credits would have subsidized hydrogen made emissions-free by using renewable or nuclear electricity to split water molecules. They also would have subsidized hydrogen made from natural gas with carbon capture, whose benefits are impaired by methane emissions from natural gas systems and incomplete carbon capture. However it's made, hydrogen is no panacea. As the world's smallest molecule, hydrogen is prone to leaking, which can pose safety challenges and indirectly warm the climate. And while hydrogen is essential for making fertilizers and potentially useful for making steel or aviation fuels, vehicles and heating are more efficiently powered by electricity than by hydrogen. Still, European governments and China are investing heavily in hydrogen production.
Bloomberg
39 minutes ago
- Bloomberg
Rally in Indian Bonds Loses Momentum After RBI's Surprise Moves
A rally in Indian bonds is stalling after the central bank raised the bar for future interest-rate cuts and on concerns that it may start curbing excess liquidity in the banking system. The yields on the five-year and 10-year bonds jumped more than 20 basis points and six points respectively this week, reversing some declines in the current quarter. This came after the Reserve Bank of India unexpectedly shifted its policy stance to neutral from accommodative last week, warning that it has ' very limited space' left for further easing.
