New Debt King: Support to cut interest rates by 50 basis points, the Fed has been

In September, the interest rate decision is about to come to the table, and the market is full of voices. Traders' attitude towards the first rate cut of 25 basis points or 50 basis points continues to be divided.

Jeffrey Gundlach, the founder of DoubleLine Capital and the new creditor, also joined the debate on the scale of interest rate cuts, and bet that the Fed will start its interest rate cut cycle by cutting 50 basis points at the interest rate meeting on Wednesday.

The market speculated that the Fed was preparing to cut the benchmark interest rate quickly to prevent economic stagnation. This expectation has promoted the trend of the bond market, and the yield of two-year US Treasury bonds has fallen below 3.6%, which is about 1.75 percentage points lower than the target interest rate of the Federal Reserve.

Up to now, the yield of US two-year treasury bonds is reported at 3.596%.

Gundlach thinks the Fed should narrow this gap. He predicted that the Fed is likely to cut interest rates by 50 basis points this time, with a total reduction of 125 basis points by the end of the year.

On Tuesday, he told the Future Proof conference in California that the US economy has fallen into recession and the Federal Reserve has maintained a tightening policy for too long:

"I think they will cut interest rates by 50 basis points. The Fed is' far behind the curve' and they should act quickly."

Traders, on the other hand, believe that the possibility of cutting interest rates by 50 basis points is about 55%. According to data released by the United States on Tuesday, retail sales unexpectedly rose in August, while employment data in August also showed a weak trend, recruitment slowed down significantly, and the unemployment rate rose to the highest level of 4.3% in the past three years.

Gundlach said that he gave the Fed an "F" rating, adding that "they should have cut interest rates earlier ... I have seen many layoffs and the United States has fallen into recession."

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