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January 04, 2013 at 07:41 AM
Mohamed El-Erian and Bill Gross, the conjoined twins of the bond world, wasted little time in commenting on the December jobs report. The co-CIOs of PIMCO, which runs the world’s largest bond fund, didn’t think much of the report, describing it as “frustrating” and predicting more volatility as the Federal Reserve continues to focus on reducing unemployment numbers.
Gross (left) told Bloomberg TV on Friday morning that more volatility will come as a result of the central bank’s announcement on Dec. 12 that it will hold borrowing costs low “at least as long” as the unemployment rate remains above 6.5% and inflation projections are for no more than 2.5%.
El-Erian, writing for The Huffington Post, said that while the labor market “continues to heal,” it is still “frustratingly gradual.”
“The challenge now is to consolidate the improvement,” he wrote. “For that, politicians need to overcome self-made problems; also, and critically, they need to stop creating new ones.”
“[G]iven the extent of damage created by the global financial crisis and the great recession, the American economy is yet to attain ‘escape velocity,’” El-Erian (right) said. “A lot more improvement is needed, and urgently so.”