Relax. Nothing to see here; move along. Granted, he has a vested interest, but PIMCO CEO Mohamed El-Erian knows why worldwide bond markets, where yields have dropped to record lows and debt has exploded to more than $40 trillion, aren’t a problem.
“We may be in a synchronized slowdown” in global economic growth, El-Erian, whose company oversees $1.77 trillion, said in a June 6 interview with Bloomberg. “We could stay here for a while.”
As the news service notes, the slowdown matches the prediction by El-Erian in 2009 for a “new normal” in global economies characterized by a slower pace of expansion, higher unemployment and a greater role for governments in private markets following the worst financial crisis since the Great Depression.
“PIMCO officials point to Japan, which has been in and out of recession since the mid-1990s, as what the new normal would look like,” Bloomberg reports. “Even though it has the world’s largest debt load at more than $11 trillion, Japan has some of the world’s lowest bond yields because of years of below-average growth.”