RE:Gundlach
DZtrader wrote: There are several people I pay particular attention to, Jeffrey Gundlach is one of them. Was just listening to an interview he provides after each Fed meeting and seems he is reflecting same views I share (or better put, maybe I'm reflecting same views he is putting out). That being near overwhelming debt levels. He appeared outright bearish the long term bonds. At the current 1.3 T (yes that's trillion) annual service costs he points out significant bonds rolling from much lower levels than current which will only serve to exasperate situation, this combined with yet more unbridled spending along with unfunded tax cuts. How do mid to long term rates not go higher? I put this out on a Reit forum as it is a sector highly impacted by rates of course. No, I'm not a doom and gloomer, just someone who tries to look at the long term outlook and how to position. Doesn't mean next week or next month is trouble but something to definitely be long term aware of.
This is why I preferred t-bills over long term t-notes.
2 things will impact inflation:
1) the growth in money supply after they've reached a neutral rate and QT expires.
2) the velocity of money
If the government continues to crowd out the private sector, they will increase the velocity of money because debt is outpacing gdp growth. If deficits grow under Trump, then they will have to inflate the debt by printing more money at the Federal Reserve. This will lead to an inflation target well above the 2% mandate and long term interest rates move higher. If Trump can decrease the deficit by reducing government spending, then that would be disinflationary.
Some things to consider:
- how much can Trump collect in tariffs?
- will this entirely offset the decline in income tax receipts?
- will the government reduce or increase the level of spending?