The chief investment officer of global fixed income Black Rock Inc., Rick Rieder, considered that the cooling of the labor market in the United States supports the speculations that the Federal Reserve (Fed) finished uploading rates and opined that this makes the Treasury bond more attractive than they have been in recent months.
The executive of the investment fund commented that BlackRock bought some 10 year bonds recently and did not rule out that the rate could reach 4.25% or 4.5%.
This happens in a scenario where the market holds that USA will begin to relax monetary politics in May with a quarter point rate cut.
When will the Fed lower rates?
Rieder did not rule out that possibility, but stated that that reduction will most likely come a little later next year.
It happens that the employment data in the northern country showed that, although the level of hiring increased in August, the salary growth slowed down in the same month and the unemployment rate rose to its highest level since February 2022.
Thus, Reider considered that it is possible to “use this as another benchmark” to anticipate the un increased slack in the workforce and opined that this is accompanied by a inflation drop.
Treasury Bond Dynamics
In this context, the two-year treasury yields fell as much as 11 basis points to 4.75% before erasing the decline, though swap traders are pricing in a less than 50% chance that the fed raises rates again in this hardening cycle.
In an interview on Bloomberg Television, Rieder opined that “the fed should be over” and that you can back it up a bit more than rate exposure than in the last few months.
The yields in the longer term they initially fell, but soon recovered, and the 10 year bond rose 7 basis points to 4.18%, causing the curve to tilt, although it remains inverted as the long term rates they remain below the short ones.
In this context, Reider said that “without a doubt, I prefer to be in the front than in the belly” and considered that having some ten year notes It’s not crazy.
Source: Ambito
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