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'The big gains are behind us': Pimco executive

The economic recoveries in Europe and America are actually working, and that means the enormous gains investors have seen in the bond and equity markets are behind us, said Scott Mather, deputy CIO at Pimco.

This should not be read as a signal of decline, but as a return to "normal,"after years of abnormal returns puffed up by the dovish central bank policies in Europe and America.

The whole goal of very accommodative monetary policy was to inflate financial assets, and it did it very well," Mather said on "Closing Bell Europe." "Going forward we are going to see much more volatile financial markets, both in bonds and in equities. The big tailwinds that have been at investor's backs are likely to dissipate."

This means going forward Mather expects single-digit returns in high-quality bonds and returns "only percent or two" higher for equities.

It also means that the enormous gaps between bond yields in troubled European economies such as Italy and Spain will drift closer to those of the euro-zone's wealthier and more stable economies.

"There is no reason why 5- and 10-year yields on countries such as Italy and Spain won't have yields closer to Germany," he said.