“They can create very unsettling volatility, not just volatility,” he said, noting that turmoil in Treasurys is structural and has largely been exposed to the Fed’s quantitative easing, which doubled its balance sheet to $8.9 trillion.
El-Erian has been vocal about criticizing the Fed’s policies and their slow response to rising inflation, which he says has caused rate hikes to be more aggressive than otherwise would have been necessary. Previously, he said a hard-landing was “uncomfortably possible.”
