Jeffrey Gundlach: US Stock Market is Hoping Too Much for a Rate Cut!

Jakarta, Pintu News – The US stock market appears to be experiencing an upswing that is driven by hope rather than sound market fundamentals. Jeffrey Gundlach, CEO of DoubleLine Capital, expressed his concern over the overvaluation of the stock market.

According to him, investors are overly optimistic about the expectation of interest rate cuts by the Federal Reserve, which is expected to push the stock market to higher levels.

Warning from the ‘Bond King’

Jeffrey Gundlach, often dubbed the ‘King of Bonds’, believes that the current rise in the US stock market is driven more by hope than in-depth analysis of economic conditions. In a recent interview with CNBC, Gundlach stated that both the stock market and the bond market have incorporated the assumption of an interest rate cut into their prices.

This, according to him, creates risk if expectations are not met. Investors seem to continuously react positively whenever there is a hint that there will be an interest rate cut. For example, the expectation of a 50 basis point cut often sends the stock market into a rally. However, Gundlach emphasizes that these expectations may be overblown and not supported by concrete economic data.

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Non-Dollar Stock Market is More Promising

Furthermore, Gundlach advises investors to look at markets outside the United States. According to him, stock and bond markets in non-dollar countries offer more attractive returns when measured in US dollar terms. As an example, he highlighted the performance of the Mexican bond market which has risen about 35% since the beginning of the year when measured in US dollars.

Investing in non-dollar markets not only reduces the risk of exchange rate volatility, but also provides better diversification to an investor’s portfolio. With volatile global market conditions, having assets in various markets can help in reducing risk and increasing potential returns.

US Dollar Performance and its Implications

Gundlach has also expressed concern about the decline in the value of the US dollar. In June, he predicted that the US dollar index (DXY), which measures the dollar’s performance against a basket of major currencies, was in a macro downward trend. If the index continues to decline and loses support at the diagonal trend line at 97, then there could be a ‘melt-up’ of the dollar’s value.

Currently, the DXY stands at 97.646, indicating that there is still uncertainty regarding the direction in which the currency will move. The decline in the value of the dollar may affect US-based investors, making non-dollar assets more attractive as investment alternatives.

Conclusion

In the face of uncertain markets, Jeffrey Gundlach’s approach offers a valuable perspective for investors seeking direction in managing their portfolios. By considering non-dollar markets and understanding interest rate dynamics, investors can be better prepared for market fluctuations ahead.

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Reference

• Daily Hodl. Billionaire Bond King Jeffrey Gundlach Warns Stock Market Rallying on Hope, Says Equities Have Priced in a Lot of Rate Cuts. Accessed on September 22, 2025
• Featured Image: CoinDesk