DoubleLine Capital CEO Jeffrey Gundlach said it is “highly likely” the Federal Reserve will raise interest rates by half a percentage point at its next policy meeting. “After Powell’s testimony today, the chances of a 50 basis point increase have increased a lot in the betting markets,” Gundlach said Tuesday during a DoubleLine webcast for investors. “We’ve had a very large increase in short-term interest rates and a further inversion of the yield curve. … We don’t need the Fed. All we need is the 2-year Treasury.” The yield on the 2-year U.S. Treasury note jumped 12 basis points to a peak of 5% on Tuesday, hitting its highest level since 2007. The sharp increase followed Fed Chairman Jerome Powell, who said interest rates “will likely go higher” than previously calculated. The so-called bond king said the Fed Funds rate has almost perfectly mirrored the 2-year Treasury rate over the years. “It now confirms the idea that the Fed will probably raise the Fed rate up to 5% at the upcoming meeting,” Gundlach said. The probability of a half-point gain rose to 70.5% on Tuesday evening, according to CME Group data. That’s a sharp increase from 31.4% just a day ago. 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 … surprise on the downside. That hasn’t been the pattern recently,” Gundlach said. “If it comes in at or above expectations, I think it’s a lock that the Fed will go by at least 50 basis points.” In Senate testimony, Powell noted that the labor market remains “extremely tight” despite the Fed’s rate hikes and efforts to curb economic growth. “We are very far from our price stability mandate, and in fact the economy is past most estimates of maximum employment,” 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.