BlackRock Rick Rieder said it is not clear whether there are additional shoes to put in the banking system, but he does not see some tightening of debt and that can hurt the economy. “When you move the fund rate up as much as it has, and the banks are competing deposit-wise with Treasury bills at a very elevated rate, and have some close assets that don’t adjust that quickly, it’s a tough stress on the system. , “said Rieder , in a phone interview. “My feeling is that there is still some volatility that will play out through the financial system.” Rieder expects the Federal Reserve to raise interest rates by a quarter of a point Wednesday, but not continue to increase as much as before problems emerged at regional banks. “I think we can take 50 basis points off interest rates in the last week and a half on where they’re going to go, where they’re going in 10 years. [Treasury] will go,” said Rieder, chief investment officer for global fixed income. “You’ve got clearly some additional economic contraction coming from the banking system that will pull back some of the debt.” Separately, in an interview on CNBC’s Lunch, “Reder also said that the regional banking industry will be clearer in the next few weeks. Regional banks have been under pressure since the failure of Silicon Valley bank and Signature Bank, but the sector saw a boost on Tuesday after the Treasury. Secretary Janet Yellen said the government could freeze deposits at other banks if there is a risk of contagion. regulated … how much capital is going to have to open going forward,” Rieder said on CNBC. “All of those are big questions that we’re going to learn over the next few weeks. He said he now expects the Federal Reserve’s terminal rate, or the end point for rate hikes to be 5.25% to 5.5%, while it was at least 5.5% to 6% before the Silicon Valley Bank failure. He also expects that problems at regional banks have squeezed some loans and taken about half a percent of gross domestic product. No time to get out of the market As for the market, Rieder said investors can get a decent return on fixed income, but still not in favor of stocks, which he sees earning about 8% this year. Rieder also leads the BlackRock Global Allocation team. He also runs the BlackRock Strategic Income Opportunities Portfolio (BSIIX) and the BlackRock Total Return Fund (MAHQX). Rieder was recognized as an “Outstanding Portfolio Manager” by Morningstar on Tuesday. “Quality fixed income will do its job,” he said in a phone interview. They say now is not the time to exit the market. Investors can hold more money but build a portfolio of investment companies, mortgages and other investments, he said. “We have bought some very quality investment grade products recently. I think the spread is very tight and I think the market is a little overzealous in all assets,” Rieder said. “Some of these high-quality fixed income assets made it through the rough times, and are now re-valuing, especially at the forefront of the investment-grade market.” He expects the current 10-year Treasury yield range to be lower, between 3.25% and 4%. Before the failure of Silicon Valley and Signature Bank, Rieder had expected the yield to be between 3.50% and 4.25%. The 10 years are closely watched because they affect mortgage and other debt levels. The note returned about 3.6% late Tuesday. US10Y 1Y treasury line The Fed’s forward balance Rieder said he believes he is calmer about the situation than some other investors. “It’s definitely a sweaty palm some days, and I think you’re going to get a lot more,” he said. As for the central bank, he said it will be important to see how the Fed discusses its role in stabilizing the financial system. “I think there is something very important. The Fed’s balance sheet is already very large … part of why I think the Fed will go to 25 is that I want to use rates as a way to tame inflation,” he said. “And I want to use the ability of liquidity and funding to make sure that the system is liquid, liquid, and that there are no banks outside that cannot deal with liquidity. So, I think that the differentiation is very big. The balance sheet has grown by $ 300 billion since 1 March. He expects the Fed to allow the balance sheet to grow and remain larger for some time. The central bank has reduced the size of the balance sheet by allowing maturing securities to be released without replacing it. “As a percent of GDP, it’s not a scary number,” he said of the balance sheet. If the system is seized, which we have felt last week, then it will be very difficult for financial transmission and then lending.” That will affect the economy. The market has priced in about a full percentage point of the rate cut for this year. Rieder said that the possibility of rate cuts will be come 2024, when he expects a recession but not a deep one. Rieder expects the Fed to raise rates by a quarter point and bus a rose again by 25 basis points before stopping. “This is a restrictive rate, and it was a restrictive rate 100 basis points ago,” he said. A basis point is equal to one hundredth of a percentage point. Rieder said central banks don’t have to move rates as much as some people think. “I just don’t understand this view… I don’t think the central bank should do as much in interest rates as many say,” he said. “People say you can just keep moving the fund level up, and move it up and move it up and don’t make stress, and that’s just wrong. We just watch it play out”. Rieder said the market now expects a rate hike and then a rate cut later this year. But he said the Fed might want to get rates on hold and stop, not cut. “I think the market is very bullish on Fed easing,” he said.