DoubleLine Capital CEO Jeffrey Gundlach said it’s “very likely” that the Federal Reserve will raise rates of interest by half a percentage point at its next policy meeting. “After Powell’s testimony today, the possibilities of a 50-basis point increase have gone up so much within the betting markets,” Gundlach said Tuesday during a DoubleLine investor webcast. “We have had a really large increase in short-term rates of interest and an extra inversion of the yield curve. … We do not need the Fed. All we’d like is the 2-year Treasury.” The yield on the 2-year U.S. Treasury note jumped over 12 basis points to top 5% on Tuesday, reaching its highest level since 2007. The sharp move higher followed Fed Chairman Jerome Powell , who said rates of interest are “more likely to be higher” than previously anticipated. The so-called bond king said the Fed funds rate has almost perfectly mirrored the 2-year Treasury yield through the years. “It’s now corroborating the concept the Fed will probably take the Fed funds rate as much as 5% on the upcoming meeting,” Gundlach said. The probability of a half-point increase rose to 70.5% Tuesday evening, based on CME Group data. That is up sharply from 31.4% only a day ago. The Federal Open Market Committee’s two-day meeting begins on March 21. “The one way that will not occur is that if the employment data and the unemployment rate … surprises to the downside. That has not been the pattern recently,” Gundlach said. “If it is available in at or above expectations, I feel it is a lock that the Fed’s going to go along with 50 basis points at a minimum.” In Senate testimony, Powell noted that the labor market stays “extremely tight” despite the Fed’s rate hikes and attempts to chill economic growth. “We’re very removed from our price stability mandate, and in effect the economy is past most estimates of maximum employment,” Powell said. The Fed has boosted the federal funds rate eight times to a goal range of 4.5%-4.75%, the very best since October 2007.