Jeffrey Gundlach: Why 'Don't Fight the Fed' Isn't Working This Time

Fed's Uncertainty and Market Reaction

• ❓ The dominant theme from the Fed's recent meeting was uncertainty, with Chair Powell using the word multiple times.
• 📉 Despite the Fed keeping two rate cuts for 2025 on the dot plot, markets reacted positively to the perceived lack of tightening signals.
• 📊 The Fed downgraded growth outlook to 1.7% and upgraded inflation expectations to 2.6-2.7%, leading to a 10-year Treasury yield around 4.3-4.4%.

Inertia and Unusual Market Behavior

• 🔄 Powell's use of the word inertia highlighted the Fed's lack of high confidence in forecasts due to numerous moving pieces.
• 📉 Since the Fed began cutting rates, bond yields have risen and the stock market has shown little movement, defying the traditional