Posted on 03/05/2020 11:13:17 AM PST by Leaning Right
“Bond King” and DoubleLine Capital CEO Jeffrey Gundlach said Thursday that he believes the Federal Reserve panicked in cutting interest rates earlier this week and that short-term U.S. rates are headed for zero.
“If we look at history, once the Fed does a panic, inter-meeting rate cut, particularly when it’s 50 basis points ... they typically cut pretty quickly again,” Gundlach said. “I’m in the camp that the Fed is going to cut rates again, perhaps even in two weeks” during its regularly scheduled meeting.
(Excerpt) Read more at cnbc.com ...
So buy a treasury (or corporate) bond instead before the rate cut. A cut in interest rates means an increase in bond price, so you’d make a profit on the price increase of your bond:
CNBC is not trustworthy they been pushing for a market collapse since the start of this . Fox Business channel is much better
> So buy a treasury (or corporate) bond instead before the rate cut. <
The big question is whether or not the next rate cut has already been priced into bonds. Knowing that is above my pay grade.
> CNBC is not trustworthy they been pushing for a market collapse since the start of this. <
CNBC is reporting a possible interest rate cut. An interest rate cut is usually a good thing for the stock market. Bonds become less attractive and stocks become more attractive.
But with the coronavirus thing afoot, conventional wisdom might mean nothing.
Responsible interest rate cuts can be good for the economy. But we’ve gone to that well too many times. Does anybody remember Japan in the 90’s? If we keep rates this low, we won’t have anything when we really need it.
Seniors are only able to invest in CD"s??
start loaning out money... over pay your credit cards, they would pay great interest.
Also good if your a government that has to borrow a trillion dollars a year just to cover operating costs. Although, it just kicks the can down a road a bit farther allowing the current managers to be long gone when the inevitable finally happens.
I agree with you 100%. And I suspect that one force behind these rate cuts is the government’s desire to borrow even more money.
If the Fed rate returned to say 6%, government debt would be even worse than it is now.
Smart Treasury officials would issue most debt in 50,75 and 100 bonds. Heavy on the 100s. They claim there’s no demand. Bull hockey.
Treasury bond (10 years maturity) is paying less than 1%.
Just buy it and hold it and watch losing buying power to inflation. /S
I almost forgot what a CD is. IMO under the mattress is better than a CD and has been for a long time.
> Seniors are only able to invest in CD”s?? <
That’s the thing. These extraordinary low interest rates are forcing seniors into riskier investments (seeing as almost everything else is riskier than a CD). Maybe that will turn out OK. But maybe it won’t.
People are buying the 10 yr to preserve their principal, not to make a gain...or minor inflation loss.
They are somewhat liquid as there is a robust market for them.
But cash is still king.
Much of the market selling has gone into cash. And it will continue to gain in popularity.
The rate cut made no sense, and was probably done for political reasons.
Mad Maxine and the reprehensible Al Green are on the attack on Wells-Fargo as well.
What to heck is a “Bond-King”?????
I only wish inflation loss was minor for seniors. Grocery & healthcare costs are rocketing up 4 times faster than gov’t CPI. Even Housing & rents are inflating fast. My daughter’s rental in Seattle increased 10% over last year.
When a stock is sold, the buyer puts out cash, so net change in cash is small.
Not true for houses. When interest rates are artificially lower than true inflation, money flows to hard assets such as stocks and real-estate causing bubble prices. So you are buying an inflated priced house. That is what what happened before housing collapse in 2010-11. Also, lower rates make more people eligible for loans and brings in more buyers and that causes more price increases.
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