Allianz Chief Economic Adviser Mohamed El-Erian discusses his outlook for the markets amid coronavirus concerns.
Buckle up: Coronavirus-induced market volatility is here to stay, according to Mohamed El-Erian.
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The yield on the 10-year U.S. Treasury note, which has hit record lows, is “dropping like a rock for two reasons,” El-Erian, chief economic adviser at Allianz Global Investors, told FOX Business’ Maria Bartiromo on Thursday.
Not only is a “massive wave” of lower rates coming worldwide, investors are pricing in “a big economic shock,” he said. “It’s a big supply shock, it’s a big demand shock, so global growth outlook is deteriorating, and that’s what the bond market is pricing.”
The 1,000-plus point swings in equity markets that investors have become accustomed to are going to persist for some time, he added, as authorities try and contain the new virus, which has spread from China to Europe, Iran and the U.S. The Dow Jones Industrial Average was set to open lower by about 600 points on Thursday, one day after surging by more than 1,170, its second-biggest point gain on record.
“We are going to have massive swings continue for a while,” El-Erian said.
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