Expect a lot of volatility as we go forward, says Allianz's Mohamed El-Erian

• US 10-year Treasury yield is expected to range from 4% to 4.5%, with the average closer to 4.5%, potentially leading to government intervention on mortgage issues.
• The market is now defined by volatility, dispersion, and fragmentation, contrasting with previous unifying themes like globalization and the Washington consensus.
• Investors should build portfolios bottom-up, focusing on picking up 'bargains' in software and AI-related names that have overshot on the downside, prioritizing companies with strong balance sheets, business models, and leadership.

Mohamed El-Erian discusses the outlook for US Treasury yields, expecting the 10-year yield to trend towards 4.5%, which could trigger administration concerns about mortgage affordability. He characterizes the current market by volatility, dispersion, and fragmentation, moving away from last year's AI 'love affair'. He advises investors to adopt a bottom-up approach, seeking bargains in oversold software and AI-impacted companies with strong fundamentals.