Bond investors have endured one of the most volatile stretches in decades, but BlackRock’s Rick Rieder says the worst is behind us — and that right now is one of the best moments in 20 years to be earning income from fixed income. Rieder, BlackRock’s chief investment officer for global fixed income and manager of the iShares Flexible Income Active ETF (BINC), told CNBC on Thursday that investors are entering a new interest rate regime under Federal Reserve Chair Kevin Warsh — one characterized by higher real rates but significantly less volatility. “Revel in the glow of higher real rates and higher income,” Rieder said, arguing that the Fed’s new approach will keep rates in a tighter range than investors have experienced in recent years.
The shift is significant. With real rates — interest rates adjusted for inflation — at their highest levels since the early 2000s, bonds are actually delivering meaningful purchasing-power-adjusted returns for the first time since before the 2008 financial crisis. Rieder’s base case calls for the Fed to hold rates steady through at least the next two meetings, with no hikes in 2026 and a possible easing cycle beginning in 2027. He is positioning BINC with its largest allocation in securitized products, including non-agency mortgages and commercial mortgage-backed securities (CMBS), because they offer attractive yields without the heavy supply pressure coming from investment-grade corporate bonds — which are being flooded by issuance from data centers and hyperscalers building AI infrastructure. BINC carries a 5.19% 30-day SEC yield and a 0.40% net expense ratio. Rieder is also diversifying into European credit, where yields are elevated because the market is pricing in three ECB rate hikes — a scenario he believes is overdone as European growth slows.
For retail investors, the practical message is straightforward: if you’ve been sitting in cash or money market funds waiting for clarity, Rieder argues that clarity has arrived. Short-term rates will remain attractive for now, but locking in today’s yields in diversified fixed income products — particularly those with exposure to securitized credit rather than vanilla investment-grade corporate bonds — is the move he’s making with billions in client assets. Emerging market bonds, particularly in Mexico, are also on his radar with a tactical allocation. The one caveat: Middle East tensions could push rates higher if they remain unresolved, so he recommends staying patient and “clipping the coupon” rather than making aggressive duration bets. The BINC ETF carries a 5.19% 30-day SEC yield — worth comparing against money market rates if you’re deciding whether to stay in cash or put money to work in bonds.
