The current leg of the bond market's rate rise is 80 percent over and the yield on the 10-year Treasury note cannot move above 2.35 percent by the end of the year, Jeffrey Gundlach, chief executive officer of DoubleLine Capital, said Friday on CNBC.
Gundlach, who oversees more than $106 billion in assets at Los Angeles-based DoubleLine, said the Federal Reserve "absolutely" should raise interest rates in December, if they plan to ever move.
"If the Fed doesn't raise rates in December, they'll never raise rates again," he said.
"The bond market is giving them carte blanche to raise interest rates," Gundlach said. "The Fed absolutely should raise rates in December if they ever plan on raising them again."
Treasury yields overall jumped to the highest levels this week since January, a possible signal that markets believe Donald Trump's policies could spark a rise in inflation.
"We have really critical resistance on yields," he said. He said the 35 basis-point rise since the election is not that surprising given the narrative about the Trump victory.
"So, I do think this rate rise is about 80 percent of the way through," he said. "At least this leg of it." He added that the rise will not have a major impact on the economy.
"Think about how interest rates have sort of been at that 2 percent or the lower level on the 10-year for so very long," he said. "I mean think about the residential housing market where so many mortgages have been priced out at 3 percent over the last many years. And what happens if mortgage rates go further from what they've gone up so far."
Gundlach also commented on Trump's win in the election. He said people just "want something real."
"They want to see things being made. They want to see policies changed," he said. "No more of this man behind the curtain stuff. It means that the financial engineering stocks and momentum stocks and I would say like the FANGs, I would stay away from them in a big way."
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