If Republicans win the House, DoubleLine's Gundlach predicts higher interest rates.

If the Republicans gain control of the House, interest rates may increase, allowing President-elect Trump to freely spend without restriction.

A renowned fixed income investor, Gundlach, whose firm oversees $96 billion, predicts that increased government spending will necessitate more borrowing through Treasury issuance, resulting in an increase in bond yields.

"According to Gundlach on CNBC's "Closing Bell," if the House is taken by Republicans, there will be a significant increase in debt, higher long-term interest rates, and it will be intriguing to observe how the Fed responds to this situation."

The outcome of the race for the House is still uncertain after the Republicans secured their Senate majority on Thursday. The Federal Reserve reduced interest rates on Thursday and anticipates making another cut in December, with some traders predicting additional cuts in 2025.

Notable investors, including Gundlach, have expressed concerns about the challenging fiscal situation due to the government's budget deficit exceeding $1.8 trillion in fiscal 2024, with more than $1.1 trillion dedicated solely to financing costs on the $36 trillion U.S. debt.

"Gundlach stated that Trump's plan to cut taxes and his pro-cyclical stimulus approach suggest that there will be pressure on interest rates, particularly at the long end. He believes that the election result is highly consequential."

If the Trump administration extends or introduces new tax cuts, it could significantly increase the nation's debt and worsen the already concerning fiscal outlook.

Gundlach, who had predicted a recession in the U.S., stated that the Trump presidency decreases the likelihood of an economic downturn.

"Gundlach believes that the Trump victory has significantly reduced the odds of a near-term recession."