DoubleLine Capital CEO Jeffrey Gundlach expects interest rates are about to trend lower as the U.S. economy deteriorates further and tips into a recession in early 2024, he said in an interview with CNBC on Wednesday.

"One thing that the market is going to have to confront is we cannot sustain these interest rates and this deficit any longer," the head of the investment management firm said.

Gundlach's comments came after the U.S. Federal Reserve held interest rates steady earlier in the day but left the door open to a further increase in borrowing costs. The Fed's policy statement acknowledged the U.S. economy's surprising strength but also nodded to the tighter financial conditions faced by businesses and households.

Gundlach said if the economy weakened, the central bank was likely to cut rates by 200 basis points and not 50, adding interest expense issues may cause the next "financial crisis".

"I really believe that layoffs are coming," he said, forecasting the unemployment rate would trend noticeably higher.

Gundlach said he preferred Treasury bills over sitting in cash and estimated the 10-year Treasury will be probably be at the same rate by the end of next year.

(Reporting by Urvi Dugar in Bengaluru; Editing by Jamie Freed)