Economist Mohamed El-Erian warned CNBC that the global government bond market is likely to experience further sell-offs and upward pressure on yields. Speaking from the Ambrosetti Forum in Italy on September 4, 2026, he emphasized the lack of appetite in the U.S. for immediate fiscal consolidation, which will continue to drive yields higher. This comes amid a recent surge in bond yields across developed markets, driven by inflation concerns and rising interest rates, with yields hitting multi-decade highs.

El-Erian identified the UK, Japan, and France as particularly vulnerable to sovereign debt challenges. He stressed that the UK is especially sensitive to U.S. rate movements, causing amplified fluctuations in its bond market. Additionally, France has become an unusual focal point within the eurozone bond landscape, overtaking Italy in investor concerns despite Italy’s historically higher risks. He noted also that key traditional buyers of U.S. Treasurys like China, Japan, and Gulf countries face internal and geopolitical constraints reducing their buying reliability.

The economist criticized the U.S. Treasury Department’s recent intervention in bond markets, describing its efforts to influence market outcomes as “a step too far.” Last month, the Treasury announced plans to double its long-dated Treasury buyback operations following rising yields, while Vice President JD Vance pushed for Federal Reserve cuts on interest rates to ease economic pressures. El-Erian called such attempts “unfortunate,” warning that the Treasury risks unintended consequences by trying to impose market conditions it cannot control.

Despite these tensions, El-Erian gave credit to Fed Chair Kevin Warsh for his recent Jackson Hole speech, highlighting Warsh’s warnings against excessive forward guidance and his framing of artificial intelligence as a transformational supply-side factor. El-Erian views these remarks as clear and insightful amid the current challenging environment, which includes significant political pressure related to mortgage affordability and interest rate decisions.