BlackRock’s Rick Rieder on Jobs Report, Fed Rate Cuts, Yields

Summary

BlackRock's Rick Rieder analyzed the June US jobs report, describing hiring as stable but unimpressive, and discussed Fed policy. He sees no near-term rate cuts but believes cuts remain possible later this year. In fixed income, he favors European duration, European credit hedged to dollars, securitized markets, emerging market debt, and global high yield for income, while avoiding US duration and US investment grade corporates.

• June jobs report mixed: unemployment lower than expected, payrolls missed.
• Hiring described as stable but broadly unimpressive, with tech layoffs rising.
• Fed rate cuts not expected near-term but possible later in 2024.
• Rick Rieder finds US duration unattractive, sees better opportunities in carry and income.
• European government bonds attractive due to slowing growth and potential ECB rate cuts.
• European high yield and IG bonds appealing for USD investors after hedging.
• Securitized markets, EM debt, and global high yield offer attractive yields.
• US IG corporate bonds less interesting due to tight spreads and heavy supply.