BlackRock CIO Talks Job Report, Rates, Bonds

Summary

Bloomberg Talks: BlackRock CIO Talks Job Report, Rates, Bonds

Date: August 7, 2026
Guests: Rick Reeder (BlackRock Chief Investment Officer of Global Fixed Income)
Hosts: Dan, Mike, Carol Massar

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Episode Overview

This episode features an in-depth interview with Rick Reeder, BlackRock’s CIO of Global Fixed Income, focusing on the latest U.S. jobs data, the state of the labor market, implications for Fed policy, inflation, bond market dynamics—especially the impact of massive debt issuance—and how investors should navigate the current macro environment. The conversation also touches on productivity trends in the economy, AI’s effects, and what’s next for credit markets.

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Key Discussion Points & Insights

1. Labor Market: “Remarkably Unremarkable”

[00:38–02:14]

• Job Report Reaction: The unemployment rate is down, but job growth is tepid; Reeder describes the data as “remarkable how unremarkable” it is.
• Productivity vs. Employment: Companies are showing strong earnings and capex, especially in tech, but job creation lags—suggesting a “productivity revolution.”
  • Quote [00:57]: “Broadly not impressive I think is the right, right term...I think it’s actually remarkable how unremarkable the data is.” — Rick Reeder
• Healthcare's Outsize Role: Stripping out healthcare jobs would make aggregate job growth negative, highlighting uneven sectoral trends.
• Corporate Mindset: Reeder argues that the focus is on operating leverage: “How you can operate without that much employment” ([01:53]).

2. Immigration's Effect & Fed’s Mandate

[02:14–03:26]

• Labor Supply Constraints: Mike points to immigration declines as part of labor force reductions, but also notes unemployment is still low (4.1%).
• Fed’s Dual Mandate:
  • Reeder argues the Fed doesn’t need to hike further, as current labor conditions don’t indicate overheating or inflation from wage growth.
  • Current rate policy won’t correct sticky inflation areas like education, healthcare, and insurance.
  • Quote [02:36]: “I don’t think the Fed needs to hike and I don’t think you really will solve the inflation dynamic.”

3. Inflation: Causes and Cures

[03:26–04:45]

• Inflation Drivers:
  • Reeder blames “sticky” inflation on services, not goods.
  • Exogenous factors (war, tariffs) play a significant role, causing price pressures through energy and supply chain disruptions.
• Policy Tools:
  • Suggests fiscal tools (not monetary) are more suited to address today’s inflation—examples include deregulation, housing policy, student loans.
  • Quote [04:18]: “There’s a whole series of fiscal dynamics that can help with inflation, but I don’t think moving the overnight funds rate will really do it.”

4. Economic Outlook: “Amazingly Strong”

[05:13–06:41]

• Rebutting the ‘Inertial Economy’ Thesis:
  • Reeder sees signs of strong economic activity, with robust capex (esp. AI-led), healthy consumption, and impressive corporate earnings—particularly in tech and leisure sectors.
  • Suggests that fiscal tailwinds have specifically boosted lower and middle-income consumption lately.
  • Quote [05:24]: “The economy is operating at an amazingly strong level...It was a pretty amazing quarter of earnings reports.”

5. Credit & Bond Markets: Navigating a Supply Surge

[06:41–09:04]

• Where to Position Portfolios:
  • Yields are attractive (high 6% range), allowing managers to stay in high-quality (A-) bonds without chasing risk.
  • Less interest in US investment grade (IG) corporate credit, given heavy new issuance from hyperscalers (like Google), and treasury supply.
  • Securitized markets, like ABS, are healthier and can offer opportunity.
• Demand Dynamics:
  • Despite heavy supply, there is robust demand from insurance companies and pension funds, fueled by attractive real yields.
  • Quote [09:04]: “It’s amazing if you price assets right on the debt side, you can place an awful lot of debt.”
• Strategic Approach:
  • “We’re trying to be in bonds, we’re trying to be as boring as you could be and take the risk in equities.” ([07:58])

6. The Impact of Massive Debt Issuance

[09:04–10:04]

• Google’s $25B Bond Offering:
  • Surprised by strong oversubscription; sees it as evidence of huge investor appetite for yield, particularly for safe, high-grade issuers.
• Global Supply Effect:
  • Treasury supply is still the “behemoth,” but new corporate and sovereign issuance from the US, UK, and Japan is high.
  • Cautions that investors shouldn’t rush to load up on interest rate risk—“Just clip coupon.”

7. Fed Policy: Hikes, Cuts, & Market Reaction

[11:18–13:49]

• Future of Rate Policy:
  • Odds of near-term hikes are low; cuts are possible but require a clear economic deceleration.
  • Fed remains “hawkish”—laser-focused on inflation rather than labor.
  • Quote [11:44]: “One thing I’ve learned about investing, it’s not what you think they should do, it’s what they’re going to do.”
• CPI’s Importance:
  • Market awaits Wednesday’s CPI numbers; only an “aberrational” outcome will shake the fixed income markets.
• Yield Curve & Fed Credibility:
  • Discussion of stubbornly high long-term yields (30-year above 5.2%)—is it about Fed credibility or just increased supply?
  • Reeder: “Reduced forward guidance is not terribly intimidating to market participants” ([14:08]).

8. Crowding Out and Bond Market Pressure

[15:13–15:48]

• Crowding Out Concept:
  • The multi-channel supply wave—from governments and corporates—creates a “crowding out” effect; all markets are being impacted, not just Treasuries.
  • Quote [15:28]: “Whenever you push that much supply on the market...there’s a crowding out effect.”

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Notable Quotes

• Rick Reeder [00:57]:
  “I think it’s actually remarkable how unremarkable the [job] data is.”
• Rick Reeder [02:36]:
  “I don’t think the Fed needs to hike and I don’t think you really will solve the inflation dynamic.”
• Rick Reeder [04:18]:
  “I don’t think moving the overnight funds rate will really do it and we’ve seen that before, it doesn’t really have that much of an impact.”
• Rick Reeder [05:24]:
  “The economy is operating at an amazingly strong level...It was a pretty amazing quarter of earnings.”
• Rick Reeder [11:44]:
  “It’s not what you think they should do, it’s what they’re going to do.”
• Rick Reeder [14:08]:
  “Reduced forward guidance is not terribly intimidating to market participants.”
• Rick Reeder [15:28]:
  “Whenever you push that much supply on the market...there’s a crowding out effect.”

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Important Timestamps

• [00:38] — Podcast interview begins: Reaction to latest jobs report
• [01:53] — Deep-dive: Productivity vs. employment
• [03:26] — Discussion of inflation and fiscal vs. monetary policy
• [05:13] — Reeder rebuts “inertial economy” idea; strong macro view
• [06:41] — Credit market allocation and bond strategy
• [09:04] — On Google’s mega bond deal and global debt appetite
• [11:18] — Rate hikes/cuts, market expectations ahead of CPI
• [13:49] — 30-year yield, Fed credibility, supply pressures
• [15:28] — Crowding out: implications of massive issuance for all bond markets

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Tone and Energy

Reeder’s tone is analytical yet optimistic about economic fundamentals, especially productivity and corporate performance. He is pragmatic about the Fed’s constraints and dismissive of alarmism around inflation or labor market overheating. The dialogue is technical, data-driven, but approachable. The discussion is colored by wit and measured enthusiasm for current market opportunities, particularly in fixed income.

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Useful For...

• Investors and analysts tracking Fed policy and macro developments
• Anyone seeking to understand today’s bond market opportunities and risks
• Finance professionals interested in BlackRock’s portfolio strategy
• Listeners navigating inflation, fiscal policy, and “sticky” price pressures

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(End of summary)

Transcript

[Rick Reeder]

Amazon Health AI presents painful Thoughts why

[Carol Massar]

did I search the Internet for answers to my cold sore problem? Now I'm stuck down a rabbit hole filled with images of alarmingly graphic source in various stages of ooze. I can clear my search history, but I can never unsee that.

[Rick Reeder]

Don't go down the rabbit hole. Amazon Health AI gets you the right care fast.

[Mike]

Healthcare just got less painful.

[Carol Massar]

Bloomberg Audio Studios Podcasts Radio News Joining

[Dan]

us now is BlackRock Chief Investment Officer of Global Fixed Income, Rick Reeder. So Rick, the unemployment rate goes down but the a surprise contraction in jobs. Last time we spoke for last month you said the employment picture is stable, broadly unimpressive. Has your assessment of this labor market changed since then with these numbers in hand?

[Rick Reeder]

No, broadly not Impressive I think is the right, right termin. In fact I was thinking about it. I think it's actually remarkable how unremarkable the, the data is. Listen, I think you know, when you look at, you know, people say well gosh, we're not hiring many people because we have a supply issue and you saw some of that play through today. But that being said, you're not seeing any wage growth so meaning there's not that demand for labor that you would expect when you got an economy that's doing as, as well as it's doing. I mean we're going to grow. I think you're going to see 6% nominal GDP. You've got corporate top line revenue that's strong, earnings are strong but you're seeing operating leverage for kick in like you read about. I mean you look at all these earnings reports, particularly in the tech space. Companies are growing, they're spending immense amounts of capex, but you're actually cutting people in many cases. So anyway, I think we're seeing a productivity revolution and I think we're watching it play out month in and month out. I mean to have only 20,000 jobs on a three month moving average. You strip out health care, you have a negative job growth in aggregate. So anyway, I think it's, listen, I just think we're going through, I think when they, when they summarize this years from now they're going to be going to witness something that is productivity. People say it's a kicking in. I actually think it's just been a, an ethos around companies growing their business and seeing how you can operate without that much employment.

[Mike]

Well also you've got the fall in immigration that is probably contributing to these big declines we're seeing in the labor force. But the people who want Jobs are apparently getting jobs with unemployment of 4.1%. So I assume this tells you as well as the Fed that we don't have a problem with the labor force side of the mandate.

[Rick Reeder]

Yeah, I mean, I think that's right, Mike. I mean, you know, I've been pretty adamant about I don't think the Fed needs to hike and I don't think you really will solve the inflation dynamic. Part of why I think these task forces will be so powerful as you'll get into what are some complex subjects. When you break down inflation and you look at the difference between services and goods, you think about what's still sticky in inflation. Education, health care, insurance, since you're moving the overnight funds rate up, really do much how. And you get to the point being if you're restrictive on rate and you're driving mortgage rates higher, I just don't see that as really effective trying to bring inflation down. You've got what I would argue is yeah, maybe it's an okay labor market but you know, you still need in particularly we have this much debt on the country, you need to grow faster, you need to put more people to work. And I think that to me is the, is the philosophy that the Fed has to employ today.

[Dan]

Well, on the inflation side of things, Rick, I know you've been a big proponent. Again, the type of inflation we have isn't something that's fixed by hikes, but perhaps by policy, not monetary policy, but fiscal policy. What is the policy you think that could start to eat away at inflation? Is it just like ending a war? Basically?

[Rick Reeder]

I mean, listen, the war is a big deal. I mean obviously not only do you get higher prices in terms of fuel, but you're, you know, there's a transmission effect through that. When you talk about obviously trade getting slowed somewhat. So anyway, the war is a big deal obviously. So that will change. Then the dynamic of people will focus on tariffs, you know, the goods inflation, you know, with the US economy is not that large everything importer of goods. So yes, and I think people got really worked up about that last year. So what do you do and how to, how do you create fiscal velocity? You know, there's a bunch of things you could do and I think quite frankly deregulation is powerful. I think the idea around how do you help with housing, things like zoning, permitting, etc. How do you get like some of the stuck student loan asset or liabilities on that young people have? How do you transition some of that? How do you help with some of that? I Think there's a whole series of fiscal dynamics that can, that can help with inflation, but I don't think moving the overnight funds rate will really do it and we've seen that before, it doesn't really have that much of an impact.

[Mike]

I guess I would ask you then in that case because I agree that there's probably not going to be anything happening on the fiscal side because they can't even vote on an Attorney General at this point. And the Fed is maybe leaning now towards a hold in September, we'll see after the Wednesday CPI report. But that leaves us with an inertial economy. And what do you think happens to the economy if there's no movement on the fiscal or the monetary side?

[Rick Reeder]

Mike? I mean, I think, I mean you're unbelievably good at analyzing this and I always appreciate the questions you ask at the FOMC meeting, etc. The only thing I will say is I'm not sure I agree with the inertial concept. I actually think the economy is operating at an amazingly strong level. And you know, look at the capex, it's obviously a big driver of that, that from AI that's getting into, you know, straight growth of economy in so many different forms. And then you look at consumption today. Consumption, you see this, you know, particularly in areas like leisure and hospitality. You see this in some of the transportation dynamics in terms of travel. Listen, the economy is operating and actually the thing that was pretty amazing to me in the last two months is some of you had a fiscal tailwind but they actually had lower and middle income that was actually starting to accelerate. And we see that in all of, we use a lot of this high frequency data. You actually saw consumption a pretty good place. So listen, I think the economy is operating extremely slow, solid level. You know, you would think in the second half of the year you start to moderate a bit post the fiscal tailwind. But boy, I, you know, you see this, I mean this is, this was a pretty amazing quarter of earnings reports that not, not, not, not pervasively across every single company or industry. But boy, I thought it was pretty darn good. And you know, part of why when you look at the equity market having a pretty good run, particularly recently, you're actually looking at multiples that are coming down because these companies are earning so fast. So anyway, I'm pretty enthusiastic about where the economy is today and I'm assuming

[Dan]

that that enthusiasm over equities translates into your world of credit. Rick, you have bank, of course, a fund that has been outperforming the broader benchmark by a healthy clip for the past few couple of years. I know last time you joined you expressed skepticism on US IG credit. You like carrying higher income. I think all of this is so interesting time at a time, Rick, where as you point out so much is happening because of AI, especially in debt with the huge issuance we're seeing from the hyperscalers. We've got another 25 billion that this market easily took up from Google just this week. And at the same time we're going to get more issuance from the treasury next week. What are you thinking about where you want to place bank just given the sheer amount of issuance that continues to hit this market?

[Rick Reeder]

You know Dan, I would say one thing about, you know, because you've had a backup in rates, you're able to hit your yield targets. I mean talk about we're hitting almost seven, I mean six, you know, high sixes in terms of yield. And so a couple of things we've been doing is you actually don't need to go down in credit quality. You don't actually don't need to go that far down in terms of the liquidity in the portfolio. So you know, we've been keeping it, you know, we've been adding a bit in terms of European fixed income. You know, I think emerging markets are interesting, particularly if you assume the dollar is not going to be not going to be moving aggressively. You made the point, right? I think investment grade credit, given the amount of supply we're going to see. Data center hyperscaler doesn't credit is not that interesting at all. But in the securitization market, you know, they securitize assets both in commercial real estate. ABS Razzie, you know that those markets are in pretty good shape. So you know, we're in an environment we don't feel like we've got to stretch a lot. You know, these real rates that today give us an amazing ability to keep our yield up without really stretching. We're running bank now with an average rating of A minus. You know, you're hitting high sixes. Like that's pretty good today. So I think we're trying to be in bonds, we're trying to be as boring as, as you could be and you know, take the risk in equities which, you know, have a little bit of volatility to them, particularly single name

[Mike]

a little bit less risk maybe in the bond market. But there's such an appetite, I guess I would say for debt, for the hyperscalers and etc. How's that affecting how you can sell all of these bonds? I was really surprised yesterday with the Google Alphabet offering that it was so oversubscribed.

[Rick Reeder]

You know, Mike, we're living through something and one of the real benefits to all the financing that has to come data center, hyperscaler, US treasury, uk, Japan is we're actually going through a pretty historic demographic that is supporting this demand for yield insurance companies, life insurance, pension. So it's amazing if you price assets right on the debt side, you can place an awful lot of debt. Now that being said, I mean the hyperscalers have clearly widened quite a bit and so you're getting the levels. I say these real rates, if you're, you know, if you're pension today and think, gosh, I can defeat a good portion of my liability stream at these real rates, it brings a lot of people in particular, if you get some spread on it and you're watching that play out, I would say one thing. I mean the supply is not going to stop coming and you know, next week we get a lot of treasury supply. So, you know, in terms of interest rate exposure, we feel like we don't have to be in a rush to add much interest rate exposure. Just like clip coupon.

[Dan]

All right, Rick, you're going to stick with us. We have to see how this market opens up and would love to get your commentary on a continued market reaction.

[Carol Massar]

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[Dan]

So markets overall are rallying, as are this bond market led by the front end as we get rate hikes priced out. We are back with BlackRock Chief Investment Officer of Global Fixed Income, Rick Reeder. Rick, okay, so this basically takes in your view a hike off the table. I wonder about cuts though, because when we had spoken about a month ago you said perhaps we still could get cuts, cuts in the back half of this year. Do you think that's still a possibility?

[Rick Reeder]

So listen, I mean I, you know you still have a Fed committee that is, that is generally hawkish. You still have a committee that is more focused on inflation than the labor readings. So listen, I mean I think, I think you could, it could still happen. You'd have to see some deceleration in economic conditions. You'd have to see, you know, we think core PCEs going to come into the, into the high twos, down to the high twos next year. We think you're going to get into the mid twos. Can you still get it done this year? I think so. But listen, I mean I think you have to. One thing I've learned about investing, it's not what you, it's not what you think they should do, it's what they're going to do. And today the structure of that committee clearly is in the. We're going to fight inflation and, and, and use the rate tool to, to be that, that tool. Do you get there? So listen, I think they still could. I just think hiking doesn't make a lot of sense today.

[Mike]

Pre interpret Wednesday for me though, the cpi, we saw a big drop in market expectations. Sort of a knee jerk move after the labor report. What's it going to take to move one way or another in the fixed income markets on Wednesday with cpi?

[Rick Reeder]

Yeah, it's a great question Mike, about it. So you know, you've gotten a couple of softer prints on inflation recently. You know we think we're in this mode of getting point 2 type of, type of numbers. When you look at core and then you know, even, you know, I was looking at the numbers for core PC be a little under the point 2 monthly reading. So you know, listen, if you got something significantly aberrational to that, you know that would certainly move markets. Listen, if the number came in significantly higher, which would be incongruous of what you've seen over the last couple of months. Listen, you know, is the Fed going to be on alert for that? Yes, I think so. You know, you know it's better than anybody. But I think this, I think this, you know what the chairman has stated, what chairman was stated. It's not just one number that he's laser focused on. He's looking at the Pan African monopoly of, of of readings and our senses inflation is slowly moderating. But you know be interesting to see those report like you said that comes out Wednesday.

[Dan]

I do wonder obviously yields are coming in now, but we have had a 30 year yield that has been stubborn and stubbornly moving higher above 5.2 at one point. Now it's obviously below 520. Do you think that this market is at all reflecting its concerns about credibility over the Fed and Chair Warsh?

[Rick Reeder]

You know, I'm a little surprised at the, at the concern around, you know, whether it was the last FOMC meeting or you know, you know, some of what I thought was a little bit harsh on credibility. I think, you know, I think reduced forward guidance is not terribly intimidating to from to market participants. So you know, I don't really think, you know, can we get more from the Fed in terms of the metrics they're looking at in terms of the structure of what is going to be important to them going forward? Forward? I think so and I think we'll get more details around that. Listen, and I think it is we're getting a lot of supply of product. You know, you're pushing real rates up because you're getting a financial transmission that is historic in terms of whether it's fiscal supply that's coming from not just us but obviously you know, pressures and whether it's uk, Japan, plus the amazing amount of supply we're getting into the credit market. So I think it's more that than it is anything else. And like y' all have said, I mean we still have some stickier inflation that is keeping these rates up. So and I those are where I would put the. What's the influences here Just super quickly

[Dan]

because we're about to talk to our tech reporter at Lillo about all the debt coming in and we talked about it just a moment ago. You talked about what it does to the IG market. Do you think it changes the attractiveness or the pressure on the treasury market at all getting all that supply from the hyperscalers?

[Rick Reeder]

I mean, I mean when you, whenever you push that much supply on the market you think about there's a crowding out effect. I mean listen, the US treasury is still the behemoth in terms of issuance but you know, you take what's coming in IG asset backs on the backside of it through data center. So yeah, I just think we're getting a lot of supply, and all markets, including government bonds, are reflective of that.

[Dan]

Hey Rick, we always appreciate your time, especially on a jobs Friday.

[Carol Massar]

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