BlackRock's Rick Rieder sees higher rates, lower volatility under Kevin Warsh Fed

According to CNBC, BlackRock chief investment officer for global fixed income Rick Rieder said income investors face a new environment under Kevin Warsh at the Federal Reserve, with higher interest rates and lower volatility for longer. He said the Fed is likely to use more policy tools, place less emphasis on short-term rate moves and focus more on the 2% inflation target, and he expects no rate hikes this year, though he did not rule out one in September. Rieder said the central bank could ease in 2027. Rieder, who manages the iShares Flexible Income Active ETF (BINC), said investors should stay conservative on interest-rate exposure and be patient. He said BINC has a 5.19% 30-day SEC yield and a 0.40% net expense ratio, and that its largest allocation is in securitized products. He said securitized markets still offer value versus investment-grade credit, while U.S. investment-grade credit is not attractive because of heavy supply from data centers and hyperscalers. Rieder said he favors non-agency mortgages, commercial mortgage-backed securities and agency mortgage-backed securities, and is also diversifying into European credit and selected emerging markets such as Mexico.