Gundlach: Inflation Risks Top AI Story with New Fed Chair's Hawkish Tone

Veteran bond investor Jeffrey Gundlach believes inflation risks are now the market's top story, surpassing AI as the dominant force driving Wall Street. According to Gundlach, economic conditions resemble those of the 1970s and could define Kevin Warsh's tenure as Fed chair.

Gundlach pointed out that manufacturing data currently looks more like the inflation of the 1970s than the Volcker era of the 1980s. He shared his 'chart of the moment' comparing two key manufacturing indicators: ISM Prices Paid, a measure of inflation pressures facing businesses, and ISM Employment, a gauge of labor-market conditions.

The new Fed chair, Kevin Warsh, sounded more focused on inflation than markets anticipated when U.S. President Donald Trump selected him to lead the central bank. 'He is absolutely telling you that he plans on delivering on price stability,' Gundlach said.