Mohamed El-Erian: Preferred the Fed didn't hike rates at latest meeting

Summary

Mohamed El-Erian, Allianz chief economic adviser, reacts to the latest FOMC decision and says he would have preferred no rate hike. He argues the recent surge in Treasury yields is driven by a supply-demand imbalance rather than Fed credibility or inflation fears. He expects more volatility and dispersion because there is no dominant economic scenario and structural uncertainty remains high.

• El-Erian preferred the Fed not hike at the latest meeting.
• He says the Fed's 12-0 vote reinforces its independence.
• He attributes the surge in Treasury yields to an imbalance between bond financing demand and fewer reliable buyers.
• He warns that the economic equilibrium is becoming more unstable as oil inventories and consumer balance sheets run down.
• He describes housing financial conditions as already tight while markets remain loose.
• He expects more volatility and dispersion due to structural uncertainty.
• He says AI and geoeconomics are transformational transitions.