BlackRock's Rieder Renews Call for Rate Cuts
Speakers
Summary
- Argues the Federal Reserve should cut interest rates now, citing that high rates primarily hurt small businesses, young people, low-income individuals, and the US government's fiscal position, rather than curbing the capex of large corporations.
- Believes the equilibrium fed funds rate is closer to 3% and the Fed should use or threaten to use its balance sheet to stabilize the long end of the yield curve to bring down mortgage rates.
- Views the current period as a supply-side inflation shock, not a demand-driven one, making traditional rate hikes less effective and more damaging.
- Is positioned conservatively in the near term due to geopolitical shocks but is actively looking for an opportunity to "buy front-end interest rates" once the stress period passes.
- Observes significant cash on the sidelines in equity markets, which could provide support and grind markets higher.
- Sees AI as the most exciting and fast-changing technology in decades, preferring to finance exposure via equity or debt with equity-like upside (e.g., converts, loans with warrants) rather than plain vanilla debt.
- Finds debt issuance from large hyperscale data center operators unattractive due to their strong balance sheets and low financing costs, but is interested in the broader "picks and shovels" infrastructure build-out around AI and energy.
- Notes vibrant demographic and economic growth in Texas and Florida, driven by migration and development in sectors like data centers and energy.
Trade Ideas
Speaker stated AI is the most exciting technology he's seen, is investing heavily "in and around" it, and specifically prefers financing on the equity side or via debt with equity participation (converts, loans with warrants) to capture upside. The rapid growth of AI is driving significant infrastructure investment ("picks and shovels"), creating opportunities beyond the core tech giants. Equity-linked instruments allow for direct participation in this growth. The sector is a high-priority area for investment, but the preferred vehicle is equity or equity-like exposure, warranting close monitoring for specific opportunities. A slowdown in AI adoption or capex; overvaluation of equity-linked securities.
Speaker explicitly said he is "looking for an opportunity... buying interest rates, particularly front end interest rates" and is "super excited about" this prospect once the current geopolitical stress period passes. The speaker expects the Fed to cut rates and sees current elevated front-end rates as an attractive buying opportunity for when the macro shock abates. A clear bullish view on front-end rates (prices up, yields down) as a tactical opportunity following a period of stress. The Fed hikes or holds rates higher for longer than expected; inflation proves more persistent.
Speaker argued the Fed must stabilize long-end interest rates, potentially using its balance sheet, because "nobody borrows off the overnight funds rate anymore." He believes the current "premium" in yields due to uncertainty should come out. If the Fed acts to stabilize the long end, it would put downward pressure on long-term yields (e.g., 10-year), causing the yield curve to bull-flatten (long-end yields falling more than short-end). Implied view is that long-dated Treasury prices will rise (yields fall), making a long position on the yield curve attractive. The Fed refrains from intervening in the long end; fiscal concerns lead to sustained term premium.
Up Next
This Bloomberg Markets video, published March 25, 2026, features Rick Rieder discussing XLK, SHY, TLT. 3 trade ideas extracted by AI with direction and confidence scoring.
Speakers: Rick Rieder · Tickers: XLK, SHY, TLT