• The inversion of the yield curve in US Treasuries suggests a recession could be on the way.

• The yield on the five-year note has surpassed the yield on the 30-year Treasury for the first time since 2006.

• "The bond market believes inflation is too high, the Fed is well behind the curve, and the Fed risks pushing the economy into recession as it tries to catch up."

Yields for three, five, and seven-year Treasury bonds are higher than the yield on 10-year notes, a fact of the bond market that has many experts warning of a recession ahead.

The yield on the five-year note surpassed the yield on the 30-year Treasury for the first time since 2006, while other parts othe curve have been inverted for weeks. While bonds have been rocked by the Federal Reserve's plan to tackle inflation by raising interest rates, stocks have been "incredibly resilient", and may be the top bet for investors at the moment, according to economist Mohamed El-Erian.

"The bond market believes inflation is too high, the Fed is well behind the curve, and the Fed risks pushing the economy into recession as it tries to catch up," El-Erian told CNBC on Monday.

The stock market has held up, he said, because the consumer and labor market continue to support the economy. He also noted that financial conditions in the lead up to the current market were favorable.

Last week, the famed economist said that the Fed is facing a lose-lose situation, with either letting inflation run high or risk triggering a recession, and that it has lost all credibility over its bad call on inflation since the latter half of 2021. As a result, El-Erian has said repeatedly that the Fed is likely to make a policy mistake this year.

While he isn't surprised at the stock market's recent show of strength, El-Erian remains wary because of the uncertainty that awaits. The bond market's volatility, too, is something investors must recognize and respect.

"Investors look around and say 'stocks may be the best place to be for now,'" El-Erian said. "[Stocks] just need to be able withstand considerable macroeconomic volatility, rates volatility, and currency volatility."

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