Gundlach: 2.20% should be the low on rates; Alibaba was probably the top for stocks for year

Gundlach: Deflation risks keep Fed on hold
Gundlach: Deflation risks keep Fed on hold

Yields on 10-year US Treasurys will hold and stocks will bounce, fund manager Jeffrey Gundlach told CNBC on Tuesday.

Gundlach said 2.20 percent should be the low in interest rates on the 10-year, and that sentiment was driving rates moreso than data. The benchmark bond was most recently yielding 2.222%. (What are bonds doing now? Click here)

Even so, he also cautioned that any move under 2.20 percent would be a game-changer for the Federal Reserve in terms of policy. The Fed is generally expected to raise interest rates in mid-to-late 2015, though as the global economy cools some have suggested the timeline could change.

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Last month, Gundlach forecast rates would stay in a range of 2.2 percent to 2.8 percent for the rest of the year.

Gundlach said the day of the Alibaba IPO was probably the top for stocks for this year. The Dow hit its 2014 high that day at 17,350.64 and has since shed nearly 1,000 points.

He also forecast the dollar would continue to rise, even as he described the strong-dollar trade as crowded.

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—By CNBC's Scott Wapner