Jeffrey Gundlach, chief investment officer of DoubleLine Capital, said interest rates may climb to 3 percent on 10-year Treasurys by next year as deficits and inflation rise under a Donald Trump presidency, a move that would hurt markets.

Gundlach, who has called the president-elect’s policies bond unfriendly, said the effects would be felt across the U.S. economy. The benchmark Treasuries are currently trading at close to 2.5 percent.

“We’re getting to the point where further rises in Treasurys, certainly above 3 percent, would start to have a real impact on market liquidity in corporate bonds and junk bonds,” Gundlach said Tuesday during a webcast presentation on his DoubleLine Total Return Bond Fund. “Also, a 10-year Treasury above 3 percent in my view starts to bring into question some of the aspects of the stock market and of the housing market in particular.”

The Federal Reserve is expected to raise its Fed Funds rate by 0.25 percent on Wednesday for the first time this year and only the second time since the 2008 financial crisis. Gundlach said on the webcast that he will be looking after the meeting for signs that Fed members are growing inclined to raise rates more aggressively in the next couple of years as the economy heats up.

Gundlach’s $58.3 billion DoubleLine Total Return Bond Fund returned 1.9 percent this year through Dec. 12. Investors pulled $1.4 billion from the fund in November, the Los Angeles-based firm said on Dec. 2, as rates climbed following Trump’s Nov. 8 win. The fund, which invests mostly in mortgage-backed securities, has beaten 90 percent of its Bloomberg peers in the last three years and 93 percent over five years.

Gundlach said on Tuesday’s call that he has increased the average duration of holdings in his fund as rates have risen since July, while still holding debt with a shorter duration -- and lower risk -- than the benchmark Bloomberg Barclays U.S. Aggregate bond index.