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Rick Rieder of BlackRock on the Fed’s next move and how he invests around it

Rick Rieder of BlackRock said the Fed should start talking about reducing its bond purchases soon and will likely start reducing its monthly purchases in the fourth quarter, likely as early as October.

This is ahead of the views of some others on Wall Street, who expect the Fed to reduce the number of bond purchases early next year. FED economists agree that the central bank may begin discussing a reduction in its quantitative easing program or asset purchases as soon as it meets in June.

The Fed buys at least $ 80 billion in government securities and $ 40 billion in mortgage-backed securities each month.

Rick Rieder, BlackRock’s chief investment officer for global fixed income, expects the Federal Reserve to reduce QE “in October at the earliest, but probably near the end of the year.”

Rieder expects interest rates to move moderately higher after the jump in yields earlier this year. He said a 10-year yield of 1.65% should move to 2% this year.

“It’s not destructive. In a way, it’s very healthy for the market, “he said.

Holding money, waiting for a moment

Rick Rieder said he had an unusually high amount of cash in his wallets and was waiting for Treasurys and agency debt to fall in price. Yields rise when prices fall.

“I think the Fed will start cutting asset purchases and the market response will make them cheaper,” Rider said.

Rieder said he would be a buyer if the 10-year yield was about 2%.

“We will wait until there is more value,” he said.

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 Junior Trader Mert Mustafa

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