West Texas Intermediate crude oil is at a 6-year low of $US43 a barrel.

And back in December 2014, “Bond King” Jeff Gundlach had a serious warning for the world if oil prices got to $US40 a barrel.

“I hope it does not go to $US40,” Gundlach said in a presentation, “because then something is very, very wrong with the world, not just the economy. The geopolitical consequences could be — to put it bluntly — terrifying.”

Gundlach added that, “If oil falls to around $US40 a barrel then I think the yield on ten year Treasury note is going to 1%.”

The 10-year note was trading at 2.14% on Tuesday.

On December 9, 2014, WTI was trading near $US65 a barrel and Gundlach said oil looked like it was going lower, quipping that oil would find a bottom when it starts going up.

WTI eventually bottomed at $US43 in mid-March and spend most all of the spring and early summer trading near $US60.

On Tuesday, WTI hit a fresh 6-year low, plunging more than 4% and trading below $US43 a barrel.

In the last month, crude and the entire commodity complex have rolled over again as the market battles oversupply and a Chinese economy that slowing.

And all this as the Federal Reserve makes noise about raising interest rates, having some in the market asking if these external factors — what the Fed would call “exogenous” factors — will stop the Fed from changing its interest rate policy for the first time in over almost 7 years.

In an afternoon email, Russ Certo, a rate strategist at Brean Capital, highlighted Gundlach’s comments and said that the linkages between the run-up, and now collapse, in commodity prices since the financial crisis have made, quite simply, for an extremely complex market environment right now.

“There is a global de-leveraging occurring in front of our eyes,” Certo wrote. “And, I suppose, the smart folks will determine the exact causes and translate what that means for FUTURE investment thesis. Today it may not matter other than accurately anticipating a myriad of global price movements in relation to each other.”

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