Investors looking for the best market indicator in 2023 should turn to the two-year Treasury yield, according to economist Mohamed El-Erian. 

"If you want to know what's going to happen in the year, follow the two-year yield at this point," he told CNBC on Monday. "That's the market indicator that has the most information. And if it continues going up, I would be worried. If it comes back down toward 4% where we were not so long ago, I would be certainly more bullish."

The two-year yield often moves before the fed funds rate, which is currently targeted at 4.50%-4.75%, and is considered the most sensitive to central bank decisions. 

On Monday, the yield rose 2.8 basis points to 4.541%, spiking from 4.036% on February 1, before strong job data raised fears that the Federal Reserve would keep rates higher for longer to cool the economy and get inflation back under control. 

Fresh inflation data is due with Tuesday's consumer price index report. And while analysts expect a further cooling to 6.3%, that's still well above the Fed's 2% target. Some Fed officials also have warned recently that the benchmark interest rate eventually may need to go higher than markets expect.

"The market is starting to sense that the very comforting disinflation story is more complex than than we'd like it to be," El-Erian said.

He added that there's more to be worried about now because some goods are now signaling a reversal of the disinflationary process, including car prices. 

"There's a lot more uncertainty about inflation and because of that, there's more uncertainty about the Fed," he said.