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The economist cited a fundamental imbalance between bond supply and reliable buyers, and named the U.K., Japan, and France as most vulnerable
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Mohamed El-Erian warned Friday that the global government bond selloff is not over, pointing to a structural mismatch between the volume of debt being issued and the pool of buyers willing to absorb it. "I don't see any appetite in the U.S. for immediate fiscal consolidation. So I suspect we will continue to see upward pressures on yields," he told CNBC at the Ambrosetti Forum in Cernobbio, Italy.
The Rene M. Kern Practice Professor at the University of Pennsylvania's Wharton School and chief economic adviser at Allianz, El-Erian argued that the yield pressure owed more to a supply-demand imbalance than to inflation concerns or doubts about Federal Reserve credibility. "If you look at the amount of issuance that's coming from governments, from hyperscalers, from companies, it far exceeds what you can count on in terms of reliable buyers," he told CNBC. "And that's why there's been pressure on interest rates."
