Gundlach: Interest Rates Will Rise If Republicans Win the House of Representatives

Foreks - DoubleLine Capital CEO Jeffrey Gundlach stated that interest rates could rise if the Republicans establish a governing trifecta that allows elected President Donald Trump to spend as he wishes by controlling the House of Representatives. Gundlach believes that increased government spending will necessitate more borrowing through Treasury issuance, thereby creating upward pressure on bond yields.

"If the House goes Republican, there will be a lot of borrowing, higher interest rates in the long term, and it will be interesting to see how the Fed reacts to this," he said. The race to control the House is uncertain as Republicans secure a new Senate majority as of Thursday.

The U.S. ended the 2024 fiscal year with the government running a budget deficit exceeding $1.8 trillion, with more than $1.1 trillion allocated solely for covering the financing costs of the $36 trillion U.S. debt. Gundlach remarked, "Trump says he will cut taxes... he is pro-cyclical stimulus. So it seems to me there will be some pressure on interest rates, particularly in the long term. I think this election outcome is very, very important."