El-Erian Warns Disorderly Shift in Japan Policy Could Spur Global Bond Market Volatility
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Mohamed El-Erian warns that a disorderly shift in Japan's monetary policy could cause bond market volatility.
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This could lead to contagion as Japanese investors sell foreign bonds, increasing risks of a "financial accident".
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However, Japan needs to accelerate phasing out yield curve control due to growing distortions.
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Prolonging exit risks forced mishandling and greater volatility spilling over to global markets.
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Japan may be close to policy change as Nikkei hints allowing higher yields, but orderly exit is key.