"Fear and loathing" best describes market sentiment toward risky assets today, a huge divergence in attitude from one year ago, prominent bond fund manager Jeffrey Gundlach said on Thursday.
The psychology among investors has changed since last summer, when people were willing to stomach volatility for income, said Gundlach, CEO and chief investment officer of DoubleLine Capital.
Today, it seems investors aren't interested in volatility at all, he said.
(Read more: Gundlach—bet on hated assets)
In turn, Gundlach is looking for clues as to what might move interest rates.
Gundlach said he expects the Federal Reserve will begin dialing back its bond-buying program in September, for example, which he thinks will cause stocks to fall and interest rates to "flush higher."
He also thinks a "period of volatility" will set in post-taper because there won't be this "safety net" to prop up the markets.