Bill Gross, Mohamed El-Erian warn against counting out the Fed on the rate hike front

, Canada

Bond heavyweights Mohamed El-Erian, left, and Bill Gross are cautioning the markets are being too hasty in counting out one or possibly two Federal Reserve rate hikes this year.

Three of the world’s most influential bond investors say the Federal Reserve is still on course to raise interest rates this year, a view the head of the New York Fed signaled could happen twice — even after April’s smaller-than-predicted gain in jobs.

Bill Gross, former manager of the biggest bond fund, said policymakers may act at their next meeting in June. Mohamed ElErian, chief economic adviser at Allianz SE and a Bloomberg View columnist, said the Fed may move twice this year. Mark Kiesel at Pacific Investment Management Co. and New York Fed President William Dudley echoed the comments.

Gross and his peers are warning investors not to count out the Fed after the Labor Department reported U.S. employers added 160,000 workers last month, short of the 200,000 positions projected in a Bloomberg survey of economists. Fed Chair Janet Yellen is also examining earnings, which rose 2.5 percent from a year earlier, more than forecast. Two-year note yields, according to Gross, are too low.


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