BlackRock bond chief Rick Rieder manages $2.4 trillion. He shares 5 trades he’s most bullish on right now — and 3 criteria that need to be met for him to start buying 10-year Treasurys.

• Rick Rieder says core CPI and job openings would have to fall for 10-year T-bills to look attractive.
• Rieder like corporate paper, IG bonds in the US and Europe, and short-to-medium-term Treasurys.
• The BlackRock bond chief made the comments at CNBC’s Delivering Alpha conference.

Rick Rieder isn’t quite ready to buy 10-year Treasurys just yet.

The bond chief at BlackRock, who oversees $2.4 trillion in assets for the asset manager, believes that yields on the benchmark bond will likely remain elevated for some time as the government continues to issue hundreds of billions of dollars of the asset each week to fund its expenses. Ten-year yields have risen from 4.1% to 4.6% this month.

“I think we’ll get some time and some issuance, and I don’t think the Fed is going to tell you tomorrow that they’re moving in terms of cutting rates,” Rieder said on Thursday at CNBC’s Delivering Alpha conference in New York, adding that the Fed will cut rates in the second half of 2024. “There will be a point in time where you want to get some more duration in, but I just don’t think we need to race into that today.”

Rieder stated that for his position to change, core CPI — or inflation excluding food and energy prices — must continue to fall. This would indicate a softening in consumer demand and the economy, implying that the Fed’s hawkish stance could be eased.

Second, he stated that job openings, as well as cyclical components of payrolls such as healthcare and education, would have to fall. This would also indicate a weakening of the economy.

The number of job openings has been declining, but it still exceeds eight million. Payrolls have also remained positive, and unemployment remains near historic lows of less than 4%. According to the Bureau of Labor Statistics, the number of job openings per unemployed person remains less than one, indicating that there are more than enough jobs available for those looking.

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Instead of where Rieder is looking

While Rieder does not like the long end of the yield curve, he does like the short end and has stated that he is beginning to move into more medium durations such as 3- and 5-year Treasurys.

Short-term and medium-term Treasurys can be purchased from TreasuryDirect or on the secondary market through a brokerage. Vanguard Short-Term Treasury ETF (VGSH) and SPDR Portfolio Short Term Treasury ETF (SPTS) are two exchange-traded funds that provide exposure.

Rieder also expressed a preference for investment-grade credit in both Europe and the United States. Investment grade bonds are those issued by companies deemed most reliable by rating agencies such as Moody’s. Funds such as the Schwab 5-10 Year Corporate Bond ETF (SCHI) and the iShares Euro Investment Grade Corporate Bond Index Fund (IE) provide exposure to the assets.

Finally, Rieder mentioned his preference for corporate paper, which is essentially short-term bonds issued by corporations.

“I love commercial paper,” he explained. “Listen up, 6.5% for a year.” I know what my return will be in a year; it will be 6.5% for single-A issuers. By the way, large, well-known issuers, I can simply lock in that rate. “I really like it.”

Corporate paper is represented by the BlackRock Ultra Short-Term Bond ETF (ICSH) and the Vanguard Short-Term Corporate Bond Index Fund (VCSH).