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Pimco: Why the Fed is banking on job growth

Janet Yellen
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It seems everyone has an opinion on when the Federal Reserve will raise interest rates, including bond fund giant, Pimco.

On Wednesday, Pimco's global economic advisor, Joachim Fels, told CNBC's Power Lunch the Fed just needs to see "moderate improvement" in the labor market to make a move.

"If we get just two more relatively decent labor reports, the data will be strong enough to make that first step in September, specifically job growth in excess of 175,000 per month."

Read More Fed's Powell: Nothing decided on raising rates in September

An early indicator of this Friday's job report came in weaker than expected on Wednesday.

ADP, the private payroll company, estimated that job growth in the private sector rose 185,000. That is 30,000 below the Wall Street consensus.

As for bond yields, Fels anticipates them to climb higher from current levels on the back of a cyclical recovery.

"Bond yields will rise moderately as the Federal Reserve embarks later this year on a long but shallow hiking path towards a new neutral of two percent interest rates." said Fels.

Read MoreWill jobs report tip the Fed's hand?