PIMCO

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.