Bloomberg Talks – "BlackRock Global Fixed Income CIO Rick Rieder Talks Fed Rates"

Date: November 8, 2025
Host: Bloomberg (Matt Miller)
Guest: Rick Reeder, Chief Investment Officer, Global Fixed Income, BlackRock

Episode Overview

In this engaging episode, Rick Reeder from BlackRock joins Bloomberg’s Matt Miller for a timely examination of the state of financial markets, labor data’s mixed messages, Federal Reserve policy, and the changing landscape for investors. With the latest jobs data painting an inconsistent picture, Reeder offers an expert’s view on navigating uncertainty and discusses the tools BlackRock uses to stay ahead. The conversation moves from fixed income portfolio strategies and the impact of AI, to whether stock markets are frothy and what should—and could—happen next with Fed policy as speculation swirls about leadership succession.

Key Discussion Points & Insights

1. Mixed Economic Data and Interpreting Market Signals

Timestamps: 00:28–02:22

• Jobs Data Complexity:
  The current economic data are sending conflicting signals; services indicators remain strong while reports like Challenger job cuts indicate weakness.

• Rick Reeder’s Approach:
  Reeder warns against an overreliance on headline jobs reports, advocating for a broader perspective using diverse data points, especially corporate earnings to gauge hiring and inventory trends.

• Labor Market:
  Reeder believes the labor market is softening considerably, and if the jobs report were released, it would reflect this trend.

  “I think we have a softening of the labor market that is quite significant … when I look at all the corporate earnings in terms of that, we have a softening labor market.” – Rick Reeder (01:38)

2. BlackRock’s Investment Tools: High-Frequency Data, AI & Scenario Analysis

Timestamps: 02:22–04:02

• Proprietary & High-Frequency Data:
  BlackRock uses credit card data and various high-frequency indicators to read real-time economic trends.

• Advanced Analytics:
  The firm deploys text mining, AI-driven scenario analysis, and tracks the rate of change for inflation and growth metrics.

• Evolution in Data Tools:
  Reeder emphasizes how fundamentally different decision-making is now compared to 5 or 10 years ago thanks to technology and data.

  “We use a series of data assimilation tools, text mining to understand what companies are saying … we don’t have it figured out yet, but … it’s one of the most exciting times for investing ever.” – Rick Reeder (03:19)

3. Portfolio Shifts: Fixed Income Positioning & The Role of 'Bank'

Timestamps: 04:02–05:37

• Interest Rate Sensitivity:
  In response to macro uncertainty, BlackRock has reduced some interest rate sensitivity, particularly on the front end of the yield curve, and has cut back on investment-grade credit exposure as current spreads lack appeal.

• Agency Mortgages:
  Mortgage-backed securities, especially low-coupon agency mortgages, have become more attractive as rates stabilize.

• Tactical Shifts:
  Actively managing prepayment risk in mortgage portfolios to adjust for changing rates.

  “We’ve reduced a little bit of our interest rate sensitivity … reduced a little bit of our investment grade … agency mortgages become much more interesting.” – Rick Reeder (04:41)

4. Market Valuation: “Froth” and Large-Cap Stocks

Timestamps: 05:37–07:54

• Valuation Concerns:
  Host Matt Miller questions whether current stock market valuations are excessive, referencing Warren Buffett ratio and the CAPE index.

• Reeder’s Take:
  He pushes back against fears of an “AI bubble,” distinguishing between highly cash-generative market leaders (e.g., big tech and semiconductors) and frothier, profitless private market ventures.

• Buyback Window:
  Strong free cash flow is enabling buybacks and CAPEX, supporting higher but justified valuations in select sectors.

  “It is the exact dichotomy of what you saw in 2002.” – Rick Reeder (07:45)
  “[These large caps] throw off ROE of 30, 35, 40% … I’ve never seen in my career free cash flow generation [like this].” – Rick Reeder (06:52)

5. Corporate Bond Issuance & Capital Structure

Timestamps: 07:54–09:09

• Why Giants Are Issuing Debt:
  Major corporations are issuing bonds despite robust balance sheets.

• Logical Leveraging:
  Reeder explains that many tech titans are “under-levered”; it’s rational to lock in low rates and optimize capital structure rather than eschewing debt for equity.

  “If you were running a big mature company … why wouldn’t we put a little bit of debt, get a little bit of gear and get your ROE higher?” – Rick Reeder (08:49)

6. Financial Conditions, Fixed Income Returns, and the Fed’s Dilemma

Timestamps: 09:09–10:32

• Record Bond Issuance & Returns:
  Despite tight financial conditions, bond issuance has hit record highs and fixed income returns are strong.

• Fed Policy’s Differential Impact:
  Interest rates are disproportionately painful for low-income households, small businesses, and the housing market, and also inflate government borrowing costs.

• Inflation Target Challenge:
  Reeder reiterates that interest rates have limited power over sticky inflation components like healthcare and education.

  “The interest rate tool today is incredibly powerful on parts of the economy that are really struggling … but very hard for the Fed to bring down sticky inflation.” – Rick Reeder (09:48)

7. The Rate-Labor Market Link, Productivity, and the Fed’s Role

Timestamps: 10:32–12:12

• Limits of Rate Cuts for Job Creation:
  Lowering rates won’t necessarily add jobs, especially as productivity surges and companies cut headcount to maintain margins.

• Small Business & Housing:
  However, lower rates help small businesses and enable labor mobility (people can move for jobs and afford new mortgages).

• Productivity Revolution:
  Technology and process improvements mean fewer workers are needed in many fields, but lowering rates slightly can support sectors that still rely on labor.

  “44% of the hiring in the US is small business. The rate’s too high for small business … Productivity is exploding. We don’t need as much labor collectively.” – Rick Reeder (11:02, 11:44)

8. Fed Succession Talk, Policy Preferences, and Market Communication

Timestamps: 12:12–14:30

• Fed Leadership Speculation:
  With Rick Reeder’s name floated for Fed roles, he declines to comment but emphasizes commitment to current investment duties.

• Policy Advice if at the Fed:
  Reeder advocates “creating velocity” by stabilizing longer rates and keeping mortgage rates low to stimulate the housing market.

• Funds Rate Recommendation:
  He calls for a lower fed funds rate: “If we’re running break-evens … at 2.35%, I think the funds rate should be at 3.”

• Transition Guidance:
  The next Fed chair period should focus on transparent, data-driven communications, emphasizing institutional integrity and policy consistency.

  “I think the funds rate should be at 3 and I just think you could move it there … and then look again … do you have to move higher or lower?” – Rick Reeder (13:22)

  “The sanctity of what that institution is … they make judgment based on here’s the data that we have … and make a decision based on that.” – Rick Reeder (14:31)

Notable Quotes & Memorable Moments

• “[The] obsession with these individual days ... there's so much information that comes through the system.” – Rick Reeder (01:11)
• “We use a series of data assimilation tools ... it’s so much different than ... five years ago, ten years ago.” – Rick Reeder (03:23)
• “I've never seen in my career free cash flow generation [like this].” – Rick Reeder (06:53)
• “Productivity is exploding ... we don’t need as much labor collectively.” – Rick Reeder (11:45)
• “The interest rate tool today is incredibly powerful on parts of the economy that are really struggling ... but very hard for the Fed to bring down sticky inflation.” – Rick Reeder (09:48)
• “I think the funds rate should be at 3 and I just think you could move it there.” – Rick Reeder (13:22)

Key Timestamps for Important Segments

• 00:28–02:22: Parsing mixed jobs and economic data
• 02:22–04:02: BlackRock’s data & AI investment strategies revealed
• 04:02–05:37: Portfolio moves: fixed income and mortgages
• 05:37–07:54: Market valuations, “froth” and sector specifics
• 07:54–09:09: Corporate debt, buybacks, and capital structure logic
• 09:09–10:32: Financial conditions, fixed income, and Fed rationale
• 10:32–12:12: Role of interest rates in labor and housing
• 12:12–14:30: Fed chair speculation, policy advice, and transition best practices

Conclusion

Rick Reeder presents an optimistic but pragmatic outlook. He stresses the importance of diversified data, advanced analytics, and adaptive strategy. He is skeptical about blanket narratives like market bubbles and advocates nuanced, sector-specific analysis. On Fed policy, he favors a lower funds rate to support the segments of the economy that need it most, and highlights the critical role of communication and data-driven decision-making—qualities he values deeply in both markets and policymakers.