Mohamed El-Erian Warns of Continued Pressure on Bond Yields
Economist Mohamed El-Erian warned that upward pressure on bond yields is likely to continue, signaling ongoing challenges for the global government-bond market. Speaking at the Ambrosetti Forum, he highlighted concerns over a decline in reliable buyers of U.S. Treasuries, including China and Japan, due to geopolitical tensions and domestic issues respectively. El-Erian also noted that traditional holders like Norway are reevaluating their allocations, contributing to an imbalance between new debt issuance and available demand. This dynamic is pressuring interest rates more than inflation or central bank credibility alone. He pointed out vulnerabilities in the U.S., UK, Japan, and France, with particular attention on how rate movements affect high-beta economies such as the UK. The current yield environment reflects these pressures: 30-year Treasury bonds yielded around 5.24%, while ETFs tracking long-term Treasuries showed mixed performance over recent periods.
Topics: bonds central banks government debt inflation