New Bond King: The Federal Reserve will not cut rates again before Powell's term ends.

Jeffrey Gundlach, CEO of DoubleLine Capital, said he expects the Federal Reserve to keep interest rates unchanged during Chairman Powell's remaining term.

Gundlach, known as the "new bond king," said on CNBC Wednesday: "I would bet heavily that there will be no more rate cuts during Powell’s term." He pointed out that Powell is emphasizing that although inflation has ticked up slightly, it’s not as bad as feared several months ago, and the unemployment rate is no longer rising significantly.

The Federal Reserve kept the federal funds rate unchanged at the 3.5% to 3.75% range that day. The post-meeting statement showed that economic activity is steadily expanding and the unemployment rate has stabilized.

At the press conference, Powell said: "Based on the latest data, many of my colleagues and I believe current policy is not notably restrictive."

According to CME FedWatch, the market expects two 25 basis point rate cuts by the end of 2026.

Powell's Term Nears Its End

Another key variable driving the prediction of no rate cuts in his remaining term is the schedule. Powell only has two policy meetings left as chairman — in March and April — before his term ends. If the Senate completes the confirmation, the new chairman will preside over policy decisions starting from the June meeting.

This means that to launch a rate cut during Powell’s term, not only would data need to show a clear turnaround in the short term, but consensus must be reached and policy communication completed within a limited window of meetings.

Market Pricing: On Hold Short-Term, Mid-Term Rate Cut Expectations Remain

Although Gundlach holds a negative view on rate cuts during Powell's term, interest rate futures pricing does not entirely rule out future easing. CME FedWatch shows that markets still expect two 25 basis point rate cuts before the end of 2026.

For investors, this divergence implies two things: first, short-term rate expectations may be more stable, shifting the trading focus to how long rates will be held; second, there remains some tail risk for mid-to-long-term policy adjustment, requiring asset pricing to balance a prolonged high-rate environment against the possibility of limited rate cuts in the future.

Gundlach reiterated his preference for international markets, suggesting investors consider allocating 30% to 40% of their portfolio to unhedged international equities. He noted that such positions could benefit from appreciation of local currencies against the U.S. dollar.

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