Investor in bonds worth billions Jeffrey GundlachFriday’s statement indicated that consumer price inflation will be elevated in 2021 but not below 4% until at least 2022.
CNBC was told by DoubleLine Capital that DoubleLine Capital head, David Levy, believes the current inflation is non-transitory. It will continue for the foreseeable future.
We believe it is almost certain that 2021 will see a 5-handle at the end. [consumer price index]Gundlach stated that the readings are going up in the coming few readings due primarily to energy prices.” Gundlach spoke on CNBC’sHalftime Report” “And, we don’t believe inflation will drop below 4% any time in 2022.”
These comments are in line with CPI. This measures the prices of a large range of consumer products. increasing at a 5.4% annual paceThis is the fastest time in thirty years for food and energy, Federal Reserve’s favorite gauge measures personal consumption expenses, excluding food, energy, and is therefore the Federal Reserve’s preferred measure. is at a 3.6% year over year paceThis is well in excess of the central banks 2% goal.
Fed officials insist that the current price increases are transitorySupply-chain shocks, a high demand for services over goods, and labor shortages all contributed to the Covid-19 pandemic.
Gundlach admitted that not all of these increases are permanent, but some, like in lumber, were temporary.
Shelter costs are one of his factors. These cost approximately one third of the CPI. However, they have not experienced the same rise as headlines.
His prediction was that inflation would continue to rise because of the increase in shelter and wages.
He said that the result has been negative real rates because government bond yields are low and inflation is high. The negative interest rates were “wickedly attractive” for investors, he said.