El-Erian Says Bond Market ‘Lacks Anchors’ for Fed Rate-Cut Path
- Swaps traders now see 80% chance of 25bp cut in November
- ‘Massive moves’ in US bonds are based on data points
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Mohamed El-Erian says that the guessing game that’s taking place over the Federal Reserve’s path for monetary policy is creating market volatility.
US bonds have sharply sold off following a strong September jobs report that led traders to rapidly dial back bets on aggressive Fed interest-rate cuts ahead after the central bank cut rates by a half-point last month. The declines since Friday has pushed the yield on benchmark two- and 10-year Treasury notes above 4% for the first time since August. Swaps traders are now pricing just an 80% chance the Fed cuts rates by just a quarter-point at its November meeting.