(Bloomberg) -- Credit risk will replace interest-rate risk as the market’s “big fear” next year, according to Mohamed El-Erian.

The end of the most aggressive Federal Reserve rate hiking cycle in a generation means the central bank will move off “center-stage” in 2024, only to be replaced by uncertainty surrounding economic growth and debt supply, the president of Queens’ College, Cambridge, and Bloomberg Opinion columnist said on Thursday.

“Savings have been run down, there is a cumulative impact of high interest rates,” El-Erian said in an interview on Bloomberg Television. “2024 is going to be a tougher year than 2023 was for the global economy.” 

“The Fed is going to have much less of an influence on where rates go from here, but unfortunately, that doesn’t mean that the volatility is going to go away,” he said. “You have a tug of war that you’re going to see playing out between issuance and a softer economy.” 

Read more from El-Erian: Yield Uncertainty Stays Even If Fed Is Done

Last week, a trio of market-moving events — the Treasury’s quarterly refunding, the Fed’s policy meeting and October payrolls data — collided to send 30-year bonds on their sharpest rally since the beginning of the pandemic. Overextended traders caught off guard and forced to cover their short Treasury positions were thought to be one key drivers of the sharp unwind and ensuing market volatility. 

“We all want more stability in the Treasury market. The Treasury market is central to so many other markets,” El-Erian said. “Having eight to 15 basis point moves every day as something regular is not good for the functioning of that market, it’s not good for other markets, it’s not good for the economy, it’s not good for the standing of the US in the financial system.” 

El-Erian expects that both corporate and government debt supply will be a key driver of yields.

“Away from Treasuries, issuance has been quite low because of the volatility in the market,” El-Erian said. “There’s a lot of issuance that has to be done, there’s a lot of government issuance that has to be done, and there are question marks about the buyers.” 

©2023 Bloomberg L.P.