Bill Gross predicts "possible mayhem" if interest rates rise.

By The Exchange Team

If the Federal Reserve continues to raise interest rates, famed investor Bill Gross predicts big trouble.

"Trillions of dollars in fiscal spending have strengthened the economy, but ultimately when that is used up, I think we've got a mild recession."

"And if interest rates continue to rise, we'll have more than that," Gross said on CNBC's "Halftime Report" on Tuesday.

“We’ve got potential chaos in financial markets,” he said.

According to Gross, tightening monetary policy would further agitate the capital markets.

Commercial real estate might face "possible defaults" if interest rates rise, Gross added.

He anticipates residential real estate to do better than during the Great Recession.