Gundlach Questions Fed Pause, Warns December Rate Hike Likely Unless Oil Falls

DoubleLine Capital founder Jeffrey Gundlach criticized the Federal Reserve's decision on Wednesday to hold rates steady, saying the central bank is "behind the curve" and must raise rates in December unless oil prices fall sharply. U.S. crude traded above $100 a barrel Wednesday. The Fed kept its benchmark federal funds rate target range at 3.75% to 4.00% after a quarter-point hike in September. Gundlach said headline CPI is trending toward 4% and commodity indexes remain in a bull market, making the pause hard to justify. The 2-year Treasury yield near 4.7%, above the overnight policy rate, signals further tightening is needed, he said. CME FedWatch showed traders pricing about an 85% chance of a quarter-point December hike. Gundlach said the decision did not change his allocation: roughly 30% equities, 30% bonds, 20% commodities and 20% dry powder. He favors the S&P 500 equal-weight index to limit exposure to AI themes he said could face "problems." He also backed cutting policy meetings to six per year from eight.