A "Goldilocks" jobs report helped push the market higher Friday, but at some point there needs to be a switch from central bank policies to other actions to support the economy and markets, Allianz chief economic advisor Mohamed El-Erian said Friday.
"Most people recognize that this path cannot continue. That it's becoming more and more artificial," he said in an interview with CNBC's "Closing Bell."
He is looking for some type of fiscal policy, structural reforms to promote genuine economic growth, a way to deal with some debt overhang and better regional architecture in Europe.
"What the markets are basically saying is that in the short term, we can do the heavy lifting, but at some point we're going to have an orderly hand-off. Otherwise we cannot maintain this huge gap between valuations and fundamentals."
Friday's "remarkable" market speaks to the "Goldilocks" jobs report, El-Erian said.
"With the exception of short-dated Treasurys, you made money everywhere," he said. "It was strong enough to give us assurances that we can withstand headwinds from Europe, but it wasn't too strong and therefore it doesn't force the Fed to do anything soon."
Uncertainty over the labor market was one reason the Federal Reserve decided not to raise interest rates at its June meeting.
When asked if there was a global bond market bubble or if it was a currency war parading around as a bond market, El-Erian replied that it was both.
"It's a reflection of overreliance on central banks, and there's a limit to how long this can go on," he said.
There are several issues weighing on the bond market, he said: negative interest rates on over one-third of government debt, headwinds to European banks, Brexit and governments not being able to move on the economy because of political polarization.
"We're creating more and more things, but in the short run could go even further as long as there's this incredible faith that central banks can do it all."