“People were looking for two rate cuts this year, but the inflation market has simply not cooperated,” Gundlach said on Fox News’ Sunday Morning Futures. “It’s just not possible, in my view, to cut interest rates when the two-year Treasury is almost 50 basis points higher than the Fed funds rate.”

Newly confirmed as Federal Reserve chair, Kevin Warsh is coming into the role at a “rough time,” Gundlach said.

With the Iran war sending oil prices surging, which bleeds into US inflation reports, he predicted that the upward trend will continue after the consumer price index jumped 3.8% in April, the fastest pace since May 2023. 

DoubleLine’s models suggest that “the next print on the headline CPI is going to start with a four,” Gundlach said.

The stock market has been “remarkably strong” through the turmoil. “When the Fed isn’t doing anything about the inflation problem, the stock market goes on a tear,” he said.

While Gundlach has been “very, very bullish on commodities now for about three years,” investors have had few alternatives to equities with bonds netting negative returns and prediction markets siphoning some interest away from Bitcoin and other speculative assets. 

Still, he said the stock market has its own risk baked in at the moment.

“The market is very expensive. It’s very speculative, but earnings just continue to blow out on the upside,” Gundlach said. “I think it’s fueled the speculative fervor.”

Read More: Gundlach Warns Investors Will Lose Money on Private Credit

Gundlach renewed his warnings about private credit, saying “I sure am” worried when asked whether he’s concerned about the sector. 

“There’s something about the private credit market that seems that always needs new investors,” he said. “Maybe it’s just greed on the part of the sponsors, they just always want more and more assets for management.”