Mohamed A. El-Erian , Columnist

Now Europe Should Worry About Higher U.S. Yields

Fed’s rate increases will lead to tighter financial conditions that could force the ECB to change policy.

September 27, 2018 at 3:15 PM UTC

Mohamed A. El-Erian is a Bloomberg Opinion columnist. A former chief executive officer of Pimco, he is president of Queens’ College, Cambridge; chief economic adviser at Allianz SE; and chair of Gramercy Fund Management. He is author of “The Only Game in Town.”

Mario Draghi is signaling that more inflation is on the way.
Photographer: Arne Dedert/DPA/Getty Images

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As higher growth and inflation, together with Federal Reserve interest-rate hikes, have pushed Treasury yields higher, commentators have pointed to a changing U.S. landscape.

Savers can now secure higher interest income; mortgage seekers face funding costs not seen for many years; investors can gain somewhat better portfolio diversification benefits by owning fixed-income securities; and for stock pickers, financials have benefited while home builders have been hit.