El-Erian Sees Elevated Yields Through Year-End Amid Supply-Demand Imbalance

Economist Mohamed El-Erian warned that elevated Treasury yields will remain a feature for the rest of the year. Speaking to CNBC, he noted that governments and hyperscalers are seeking large amounts of funding while reliable bondholders and buyers are stepping back.

The gap is being filled by short-term money, which demands higher compensation every time oil prices rise. This imbalance between supply and demand will keep yields elevated, even if oil prices fall.

El-Erian drew parallels with the 1980s, saying policymakers are responding to the situation with monetary tightening rather than fiscal containment. He also noted that earnings have so far protected the market from several pressures, but this shield is getting pressure from various sides.