The Dow Jones industrial average showed just how fragile U.S. markets might be when it shed more than 1,000 points in early trading Monday amid global growth fears and a looming Fed rate hike.
It's that fact that might make the Fed think twice about destabilizing markets even further with a rate hike in September, according to Pimco's Mark Kiesel.
"The market right now is pricing it at about 10 to 15 percent," the CIO of global credit told CNBC's "Power Lunch" in an interview. "If you look at the break-even inflation rate falling that's going to cause some concern on the Fed, they may want to wait."
Looking further into the future, however, Kiesel noted that the market was only pricing in a Fed funds rate of 75 basis points by the end of 2016 and 1.25 percent by the end of 2017.
"The economy is doing better than that," he said. "Those rates are likely going to be higher a year, two years, three years out so the reality is that the front end of the bond market is not attractive here, we would much prefer TIPS and housing-related sectors."
Though a fragile market might not present the best backdrop for a rate hike, Kiesel highlighted an unemployent rate that has fallen 2.2 percent in two years and low commodity prices he described as "bullish for U.S. consumers" as possible catalysts.
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"The reality is if you look at the domestic U.S. economy the Fed has a lot of reasons to get off of zero," he said. "Whether it's September or a little later, it's clear that they will have to get off zero eventually."