Jeff Gundlach Now Sees Bargains in Credit Markets

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Jeffrey Gundlach, founder and chief executive officer of Doubleline Capital LP.

Bond king Jeff Gundlach says the selling wave that roiled credit markets in May and June has come to an end.

"The liquidation cycle appears to have run its course with emerging market bonds, U.S. junk bonds, munis and MBS—all of which substantially underperformed Treasurys during the rate rise—now recovering sharply," he told CNBC's Scott Wapner, host of "Fast Money Halftime Report."

Gundlach, the founder of DoubleLine and co-manager of the $39.4 billion DoubleLine Total Return Bond Fund, told Wapner in an email that "the 200-basis-point-yield rise on certain sectors brought absolute yields up to levels high enough to create a compelling value proposition."

"Not surprisingly, investors have been drawn to these values leading to interest rate stabilization," he added. Gundlach says July will not be a repeat of May/June in the interest rate market, when a rapid increase in rates rattled markets. Gundlach has a scheduled update call at 4:15 p.m. EDT.

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Like many others, Gundlach was clearly surprised by the quick jump in rates, which took the 10-year from 1.62 percent on May 2 to 2.66 percent this week. On June 19, he said on "Fast Money Halftime Report" that he did not expect to see a 2.5 percent 10-year anytime in 2013. He was soon proven wrong.

(Read More: Buy Treasurys, as Bernanke Is All Talk: Bond Pros)

Later that day, the Fed signaled that it may begin to wind down its $85 billion-a-month bond-buying program, or QE, before the end of the year. That sent rates on another run higher.

DoubleLine has $60 billion under management. Gundlach was named "the king of bonds" by Barron's in 2011.

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—By CNBC's Patti Domm.