The 10-year Treasury yield is above 5% for the first time since 2007, and Rick Rieder is not calling it a crisis. He tells Brian Sozzi it is an eye-opener, then says what he is doing about it: shortening interest rate exposure, moving out of mortgages, and running a smaller equity position. He grades equities a B minus and says that grade is new. The arithmetic is the point. He expects 10% to 12% from stocks over the next year and he can get a safe 7% to 8% instead, at an A rating, with under three years of duration. He also prices the Fed. Every 100 basis points, he says, costs the US government $130 billion to $150 billion a year.
Featuring
Brian Sozzi, Host, Sozzi Unleashed, Yahoo Finance
Rick Rieder, Chief Investment Officer of Global Fixed Income, BlackRock
Watch the full episode of Sozzi Unleashed: https://youtu.be/PLACEHOLDER-REPLACE-BEFORE-POSTING
Timestamps
0:00 A second cross-country day trip in two weeks, and “extraordinary” cross currents
0:59 The moves being made in client portfolios right now
1:23 Equities are a B minus, and that is a change
1:54 Higher real rates and the first derivative of AI growth
3:05 Not a crisis, an eye-opener
3:34 Rollover financing risk and a frozen housing market
4:00 A 7.2% yield at an A rating against 10% to 12% in equities
4:29 Why yesterday’s selloff was smaller than expected
5:17 Whether the big IPOs still come in this backdrop
5:28 Why the Fed should not be hiking, and why it will anyway
6:03 What every 100 basis points costs the US government
6:44 On being in the running for the Fed chair job
7:22 What the Fed should tell markets instead of forward guidance
8:04 What the 10-year has returned historically from a 5% start
9:08 Whether the Treasury has to step in, and what “foam on the runway” means
9:51 The one surprise being watched before year end
#Bonds #TreasuryYields #BlackRock #SozziUnleashed #YahooFinance
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