DoubleLine Capital CEO Jeffrey Gundlach said it is “very likely” that the Federal Reserve will raise interest rates by half a percentage point at its next policy meeting. “Following Powell’s testimony today, the possibility of a 50-basis-point increase is already overwhelming the betting market,” Gundlach said Tuesday during a DoubleLine investor webcast. “We’ve had a sharp increase in short-term interest rates and a further inversion of the yield curve. … We don’t need the Fed. All we need is a 2-year Treasury.” The yield on the 2-year US Treasury note jumped over 12 basis points to above 5% on Tuesday, reaching its highest level since 2007. The sharp move higher followed Fed Chairman Jerome Powell, who said interest rates were “likely to be higher” than those anticipated beforehand. The so-called bond king says the Fed funds rate has almost perfectly mirrored the 2-year Treasury yield for years. “This reinforces the idea that the Fed will take the Fed funds rate up to 5% at the upcoming meeting,” Gundlach said. The probability of a half-point increase rose to 70.5% Tuesday afternoon, according to CME Group data. That’s up significantly from 31.4% just the other day. The Federal Open Market Committee’s two-day meeting begins on March 21. “The only way that won’t happen is if the employment data and the unemployment rate … are shocking. That’s not a new pattern,” Gundlach said. “If it comes at or above expectations, I think it is key that the Fed will go with 50 basis points at a minimum.” In his Senate testimony, Powell noted that the labor market remains “very tight” despite the Fed’s rate hikes and attempts to slow economic growth. “We’re a long way from the price stability mandate, and the economy has exceeded the maximum employment estimate,” Powell said. The Fed has raised the federal funds rate eight times to a target range of 4.5%-4.75%, the highest since October 2007.