After a powerful market rally since the November election of Donald Trump, US markets are perched at all time highs. As of Friday’s close the Dow is just below the psychologically significant 20,000 point threshold while inflation and inflation expectations have increased sharply and the US Dollar has surged.
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To get his take on what it all means and where we are going, CNBC caught up with Allianz’s Mohamed El-Erian. In short, El-Erian zeros in on further strengthening of the US dollar rather the bond markets and rising rates as the key risk to markets moving forward. When asked if he expected interest rates to ‘sky-rocket’ El-Erian notes that while the bond market “is smelling higher inflation as well as higher growth, I disagree on rates skyrocketing because of international arbitrage. If anything skyrockets its going to be the dollar. and that’s why its really important to think about the divergence (between the US and International outlooks)”
There is more in the full interview which is embedded below:
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