By Deena Beasley
(Reuters) - Jeffrey Gundlach, chief executive officer of DoubleLine Capital, on Thursday said U.S. Federal Reserve Chair Janet Yellen appears to be more cautious on raising interest rates than some other Fed governors, and he expects her comments to be dovish again on Friday, when she is scheduled to speak at an event in Massachusetts.
Gundlach, who helps oversee $99.7 billion at Los Angeles-based DoubleLine Capital, said the Fed is "a bit stuck" given that it will not have ammunition available for the next recession unless it raises rates, despite continued lackluster economic growth.
Gundlach, speaking at a DoubleLine event in Beverly Hills, California, noted that some developed countries, including Australia and Sweden, tried to raise interest rates in 2010, but ended up having to reverse course.
"The Fed seems hell bent on raising interest rates until something breaks, which is what happened in these countries," he said.
With U.S. inflation at 2 percent and unemployment at 5 percent, the Fed is "in kind of a conundrum," he said, estimating that there is up to about a 75 percent chance that rates will be raised this year, based on the yield curve for U.S. Treasuries.
Gundlach also commented on other markets, including oil, saying that he is "quite sure" oil prices will go down again.
He also said that if the Standard & Poor's falls below 2,000 points, it will be headed toward 1,600. The S&P closed flat at 2,090.10 points on Thursday.
Gundlach also warned that he thinks "commercial real estate has bubbly characteristics."
He said sectors that look cheap include emerging market debt, mortgage-backed securities and junk bonds, although he said junk bonds look "dicey."