"Commodity prices so weak suggest dwindling global growth,"
Gundlach told Reuters.
Gundlach, who has warned against interest-rate increases all
year, said weak nominal gross domestic product growth; falling
commodity prices, especially in energy which portend higher
corporate default rates; tightening financial conditions and
higher financing costs for corporations will affect growth next
The Federal Reserve's policy-setting committee raised the range
of its benchmark interest rate by a quarter of a percentage
point to between 0.25 percent and 0.50 percent, ending a lengthy
debate about whether the economy was strong enough to withstand
higher borrowing costs.
"With the economy performing well and expected to continue to do
so, the committee judges that a modest increase in the federal
funds rate is appropriate," Fed Chair Janet Yellen said in a
press conference after the rate decision was announced. "The
economic recovery has clearly come a long way.
Gundlach, who oversees $80 billion at the Los Angeles-based
DoubleLine, said the Fed "had no reason to raise rates and
Yellen's lack of an answer as to why they did proves it. She
couldn't answer the question as to why they raised rates today."
Gundlach said the recent announcement of Third Avenue's decision
to block redemptions and liquidate a fund with $789 million in
assets came at an auspicious time. "If the gating would have
been announced a month ago, I believe many credit hedge funds
would have seen a spike in year-end redemption requests,"
Gundlach said. "But by now the deadlines for redemptions have
passed for most funds."
(Reporting By Jennifer Ablan; Editing by Cynthia Osterman)
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