Jeffrey Gundlach gives insights into where he believes the Fed fund rates are heading in 2025.
He noted that the bond market was printing seven rate cuts in 2024 and that by late January, everyone thought that was crazy. “We all collectively lost our minds pricing the Fed that way,” he said.
Jeffrey Gundlach acknowledged that in June, even Fed chair Powell was Dovish. He recalled the Fed fund rate was around 5 and 38, and the inflation rate was about 3%, even though he noted many variations in the inflation rate.
“So you have the Fed fund rate, the highest it has been in a long time, and he thought they would cut 150 basis points within a year at the most,” he said.


“We all collectively lost our minds pricing the Fed that way”
JEFFREY GUNDLACH
Jeffrey Gundlach gives insights into 2-Year Treasury predicting Fed fund rates
“The Fed follows the U.S. 2-Year Treasury Note,” he said.
The current yield on the 2-year Treasury Note is 4.36%, with the Fed fund rates at 4.33%.
So, based on the 2-year Treasury as a predictive indicator the probability of future Fed rate cuts is low.
He doubts the effectiveness of the copper-to-gold ratio as an indicator; Jeffrey Gundlach gives insights
“The inflation rate is coming down. I use the copper-to-gold ratio as my beginning point to where the 10-year treasury yields should be. It worked well for decades with declining interest rates, but what has happened is certain relationships don’t hold anymore,” he said.

“The inflation rate is coming down”
JEFFREY GUNDLACH
Jeffrey Gundlach concludes that falling interest rates are due to disinflation or stable low inflation.
“People are buying gold not only for the economic weakness but for the collapse of institutions. They don’t trust the system,” he said
“So I have rejected the copper-gold ratio,” he added.
Jeffrey Gundlach gives insights into the best predictive pattern
I am looking at WTI crude oil prices,” he said,
Crude oil is at 77 USD a barrel,
“Every time you get a 10 USD move down in oil, you can count on a half a point coming down on the CPI,” said Jeffrey Gundlach.
Crude oil was around 70 USD at the beginning of January, moving higher by over 7 USD in two weeks, so based on crude prices as a predictive pattern of CPI and trajectory of Fed rate cuts, it indicates no rate cuts.
“Gold will continue to do well simply because people do not trust the system anymore” – Jeffrey Gundlach
Jeffrey Gundlach gives insights into other factors
He believes the economy is weakening. Job reports are over-inflated.
“The US economy was in recession in September 2024,” he said.
Leading indicators have been terrible for two years. The average work week is shrinking. First, they cut the hours then they cut the bodies. I am seeing a lot of layoff announcements, and that sounds recessionary to me,” he said.
“I think they are staying too tight for too long,” he said.
Households pay 28% interest on credit card debts, and the Federal government is paying 1.2 to 1.3 Trillion USD on interest payments. We are borrowing money to pay our interest,” he said.
Geffrey Gundlach gives insights into how he is investing
“Gold will continue to do well simply because people do not trust the system anymore. We are short long-term bonds and long 2 to 5 Year treasuries and it’s working a lot and going to keep working,” he said.