Monday, March 21, 2011


PIMCO’s Mohamad El-Erian on QE2, Japan, Inflation:

QE2 likely to end in June
Cannot identify enough buyers to absorb Fed QE2 sales
It is not clear who will step in after June 30th when QE2 formally ends
Do not see sufficient demand coming in to offset what the Fed has been buying
Expect the Treasury to continue with its heavy issuance program
Japan ripple effects will likely go on for awhile
Japan likely to purchase less Treasuries
Headline inflation likely to remain high for some time
Likely effect places upward pressures on the existing level of US Treasuries yields.

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