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Traders are overplaying the prospects of an aggressive series of Federal Reserve interest-rate cuts before the end of the year, according to Mohamed El-Erian.\u00a0<\/p>\n
\u201cIt is problematic in my mind that the market is pricing in so many rate cuts right now,\u201d El-Erian, the president of Queens\u2019 College, Cambridge, told Bloomberg<\/em> Television on Thursday. \u201cThe market is overdoing it.\u201d<\/p>\n Treasuries slipped Thursday following Wednesday\u2019s gains after the release of the Fed minutes and revisions to US jobs data. A Bloomberg gauge of Treasuries is up some 1.8% so far in August.\u00a0<\/p>\n In recent days. traders have cemented bets in the swaps market that Fed policymakers will ease policy by as much as one percentage point by year-end, starting in September with the likelihood of a 25- or even 50-basis-point cut.\u00a0Minutes from the central bank\u2019s July meeting<\/a>\u00a0signaled several officials saw a case for lowering borrowing costs next month, and the\u00a0latest jobs data<\/a>\u00a0\u2014 revealing employment growth was far less robust than previously reported \u2014 reinforces that the cuts are all but assured.\u00a0<\/p>\n According to El-Erian, the Fed will more realistically ease borrowing costs by 75 basis points by the end of the year.<\/p>\n \u201cThere\u2019s this notion of a hard landing policy response to achieve a soft landing, that has got to be reconciled one way or another,\u201d said El-Erian, who is also a Bloomberg Opinion<\/em> columnist. \u201cThe market\u2019s going to have to adjust at some point.\u201d\u00a0<\/p>\n Traders will be looking for clues on the scope of Fed easing as the central bank\u2019s annual symposium taking place in Jackson Hole, Wyoming kicks off Thursday. Chair Jerome Powell will discuss the economic outlook on Friday. \u00a0<\/p>\n<\/div>\nRecommended Newsletter: <\/strong>High-level insights for high-powered executives. Subscribe to the CEO Daily newsletter for free today. Subscribe now<\/a>.<\/div>\n<\/div>\n