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DoubleLine's Gundlach: Could see US 10-year yields go to 2.2%

Famed bond fund manager Jeff Gundlach on Friday warned yields on U.S. 10-year Treasurys could fall sharply, with momentum driving the market.

Gundlach said in a "Power Lunch" interview it will be interesting to see if the 10-year yield gets below 2.35 percent.

"If that's the case I do think we're going to 2.20," he said.

Gundlach said U.S. Treasurys yields are being dragged down by moves in the European bond market.

DoubleLine Capital CEO Jeffrey Gundlach speaks at the Bloomberg Markets 50 Summit in New York.
Jin Lee | Bloomberg | Getty Images
DoubleLine Capital CEO Jeffrey Gundlach speaks at the Bloomberg Markets 50 Summit in New York.

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"At this point it's a momentum trade," he said. "For now, people are looking for safety and obviously the Treasury bond market looks relatively attractive versus other bond markets."

As for the Federal Reserve conference in Jackson Hole, Wyoming, next week, he expects it to be "benign."

"The action of the bond market is not suggesting interest rate increases at all and so the Fed usually follows the long end of the bond market," he said.

Gundlach thinks the Fed's zero interest rate policy will be with us longer than most think.

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—By CNBC.com staff