'I do think rates are going to fall as we move into a recession in the first part of next year,' Gundlach said on CNBC's 'Closing Bell' Wednesday.
believes that interest rates are about to trend lower as the economy deteriorates further and tips into a recession next year.
The so-called "bond king" pointed to a few signs of an economic slowdown. Firstly, the unemployment rate, while still low, has been trending higher. Secondly, the key spread between 2-year and 10-year Treasury yields has stayed inverted for over a year, and has recently started to steepen, which is a recession signal, he said. He also saw an initial wave of layoffs.
Gundlach also sounded an alarm over the growing federal deficit, which ballooned to nearly $1.7 trillion at the end of the latest fiscal year that ended in September. The budget shortfall adds to the staggering U.S. debt total, which stood at almost $34 trillion.
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