Bonds

Pay attention to your fixed income portfolio, Calstrs chief Christopher Ailman says

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Santelli Exchange: Treasury technicals

Investors and retirees alike will have to take note of their fixed income portfolios, as the country anticipates higher inflation and interest rates under a Trump administration, Calstrs' Chief Investment Officer Christopher Ailman told CNBC on Wednesday.

Appearing on CNBC's "Squawk on the Street," Ailman said that the 10-year andthree-year U.S. Treasurys have been in a channel, or trading in a specific price range, for over 30 years — a trend that inflation could seriously disrupt.

"I think you're really seeing a change of a 30-year time period of declining interest rates to more rising and normalizing interest rates," Ailman said. "If they break out of that [trend], that's going to be a huge shift and people have to pay attention to their fixed income portfolios."

But profound as a breakout like that would be, Ailman, who oversees a $192.9 billion investment portfolio at the world's largest educator-only pension fund, advised investors not to get too hasty.

"Wall Street's gotten very excited about a change in government, but we haven't seen anything yet," he said. "I think the markets have gotten a bit ahead of themselves. I like the trend, but I think we're going to see more of a flat market once we get past January."