El-Erian Says Despite Recent Tremors, 'We Are Nowhere Near A Banking Crisis'

Allianz chief economic adviser and noted economist Mohamed El-Erian reportedly said though there have been tremors that impacted the banking system, a banking crisis is definitely out of the picture.

What Happened: “First of all, we are not in a banking crisis. We are nowhere near a banking crisis. We have had tremors that have impacted some banks. You need the large banks to be in trouble to be in a banking crisis, and they are not going to get in trouble,” he told CNBC.

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On Bond Market: El-Erian said he thinks the bond market has been incredibly volatile and cited the example of the two-year treasury yield that shot up from around 3.60% to about 4% in a matter of a few days.

"In the last month, the range has been a 150-basis points. This is a two-year that is supposed to be anchored by Fed expectations. So, the bond market itself is trying to figure out where to go, and we have now discovered what I have feared for a long time, which is that price isn’t no longer signal as well as it used to be because of the amount of distortions that have happened to the fixed income markets," he told CNBC.

U.S. markets closed mixed on Monday as investors and traders commenced the week on a cautious note ahead of the release of the consumer price inflation data on Wednesday that will decide the course of the Federal Reserve's next policy decision.

The SPDR S&P 500 ETF Trust (NYSE:SPY) closed 0.1% higher while the Invesco QQQ Trust Series 1 (NASDAQ:QQQ) lost 0.05%.

On Recession: El-Erian also expressed confidence that a recession could be avoided. "My view has been there’s no reason we should fall into recession other than getting another Fed policy mistake. Look at Friday's jobs report. It had what people wanted to see — solid employment growth, higher labor force participation. That’s good for both the demand and supply side of this economy," he said.

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