The lack of a flight to the US dollar and Treasurys during the crisis in Egypt is a warning sign that investors are moving away from traditional American safety plays, Pimco's Mohamed El-Erian told CNBC.
 |
Photo: Norbert Schiller for WEF |
Since the revolt against President Hosni Mubarak hit a tipping point in late January, the dollar has changed little—slumping initially and on a slight uptick in the past few trading sessions. Treasurys, meanwhile, have sold off sharply, sending yields to their highest levels since April 2010.
At another time, such geopolitical turmoil might have sent investors flocking to the traditional safe-haven plays, but that has not been the case so far.
"Had you asked me 19 days ago what happens to the dollar if we have the sort of developments we had, I would have told you the dollar would be stronger," said El-Erian, co-CEO at the company that runs the largest bond fund in the world. "With the exception of three days, the dollar has weakened during that period. You are seeing a reassessment of the standing of the US dollar and the US Treasury market has the flight to safety, the flight to quality."
