Mohamed El-Erian thinks the bond market is pricing in too many fed rate cuts in 2024 and in the next 12 months.
- Speaking on Bloomberg surveillance, Mohamed El-Erian repeated his arguments that the fed needs to stem erosion of the “3 anchors of stability.” Said here has been a narrative volatility on the basis of high frequency noisy data. that tells you that we do not have anchors in this market. The 3 anchors El-Erian refers to are growth, forward guidance, and technical anchors.
- Says fed needs to discuss where R* is, and say they will modify their opinion based on data.
- Doesn’t think we will there will be 220bps of cuts in the next year or 100bps of cuts in the remainder of 2024 as the market is pricing. Says there is a contrast between what the bond market is pricing and what the equity market is pricing.
- Mentioned Central Bank buying go gold indicates there is desire to diversify away from the dollar
