Sharp Turn in the Wind! The New Bond King: The Fed's Next Move May Be Rate Hikes

GateUser-bd883c58 · 2026-03-23T00:46:10+00:00

Bond King Jeffrey Gundlach stated that the rise in U.S. Treasury yields indicates that the Federal Reserve may raise interest rates, as geopolitical conflicts have led to higher global energy prices, reigniting inflation concerns. The market generally rules out rate cuts in 2026, with the probability of a rate hike reaching about 6%.

GateUser-bd883c58

2026-03-23 00:46:10

Abstract generation in progress

Ask AI · Why does the New Bond King warn of rate hikes based on U.S. Treasury yields?

Expectations for Fed rate cuts are rapidly fading, and the New Bond King believes the Fed may raise interest rates next.

On Thursday, March 19, Jeffrey Gundlach, CEO of DoubleLine Capital and dubbed the “New Bond King” by the market, posted on social media that the two-year U.S. Treasury yield suggests the Fed may implement a rate hike. He pointed out:

The two-year U.S. Treasury yield has risen 50 basis points in less than three weeks, and the current trend indicates the Fed might raise rates.

On the same day this statement was made, Wall Street largely ruled out the possibility of the Fed cutting rates in 2026.

(This year, the market expects almost no rate cuts from the Fed)

Energy Shock Reignites Inflation Concerns

The trigger for this reversal in expectations is the sharp rise in global energy prices caused by geopolitical conflicts.

Before the outbreak of war, the market generally expected the Fed to cut rates at least twice by 2026. As energy prices surged, inflation outlooks became more complex, and these expectations have been completely re-priced.

On Thursday morning, the highly sensitive two-year Treasury yield briefly rose to a seven-month high, though it later retreated, still climbing over 40 basis points in three weeks.

(Since the US-Iran conflict, the two-year Treasury yield has risen over 50 basis points at times)

Wall Street Journal noted that this week, the Fed decided to keep the benchmark interest rate unchanged at 3.50% to 3.75%, and the latest policy statement still maintains a median outlook of one rate cut in 2026.

However, it is worth noting that the current market hawkish expectations have exceeded what the Fed’s official guidance implies, with futures markets implying about a 6% chance of rate hikes.

This means some traders believe that if inflationary pressures persist, the Fed may not only hold steady but could even resume tightening. Gundlach’s warning further reinforces this tail risk narrative, causing fixed income market sentiment to become more cautious.

View Original

This page may contain third-party content, which is provided for information purposes only (not representations/warranties) and should not be considered as an endorsement of its views by Gate, nor as financial or professional advice. See Disclaimer for details.