There is still a “generational” opportunity to grab attractive income, but it’s not going to stick around for too long, according to BlackRock’s Rick Rieder. “The generation is getting a bit more mature,” he said. Still, fixed-income markets continue to offer historically attractive levels of income — which means there are plenty of opportunities for those willing to do the work, Rieder, the firm’s chief investment officer of global fixed income, said in an interview with CNBC. Bond yields move inversely to prices. “You have to be a bit more innovative,” he said. Investors should also bear in mind that payouts can add up over time, he said. He referred to it in BlackRock’s fourth-quarter fixed income outlook, released Tuesday, as “making a little bit of money a lot of times.” Interest rates to come down Rieder anticipates interest rates will fall as the Federal Reserve continues its rate cuts. The central bank decreased the federal funds rate by 25 basis points — or 0.25 percentage point — at its September meeting and indicated the possibility of two more cuts this year. The United States economy and the corporate sector both remain in great shape, Rieder said. However, as companies embrace artificial intelligence, which will boost productivity, the result will be fewer jobs for workers, he noted. “You see all the big companies that are growing and their earnings are great, and then you look at what they’re doing with regard to hiring, and it’s tepid to say the least,” Rieder said. That matters since the Fed’s mandate is full employment, not economic growth, he explained. “I think that’s going to be a secular trend that is real and part of why I think the interest rate will come down,” he said. The possibility of lower rates in the shorter term and anemic job growth due to technological and productivity gains in the medium term could mean an interest rate policy that is quite different structurally over the next decade than it was pre-Covid, Rieder said. “In fact, while the Fed previously struggled to elevate (the then-tame) inflation rate pre-Covid, we may transition to a place where the central bank struggles to elevate employment going forward,” Rieder wrote in the firm’s outlook. Finding opportunity Rieder has been advocating that investors focus on income since duration is no longer the reliable hedge against stocks that it once was. Consistently high coupons can perhaps serve as a defense against stock market drawdowns, he has suggested. These days, spreads have tightened, so investors have to expand how they think about fixed income, said Rieder, who also manages the iShares Flexible Income Active ETF (BINC). The fund, launched in 2023, just hit $13 billion in assets. It has a 5.15% 30-day SEC yield and a 0.40% net expense ratio. For instance, he’s swapped some of his U.S. investment-grade corporate bonds for mortgage-backed securities, which are more liquid. Europe is a favorite place to be, including investment-grade credit, high yield and securitized products, he told CNBC. “The opportunity set is growing, like in securitized, but also the [cross-currency] swap is awesome,” he said. Rieder has also been moving into emerging markets, which he initially avoided since there was yield to be had everywhere. “Now, with the dollar contained, there’s some local rates in emerging markets that give you some good carry,” he said. Emerging-market corporate bonds are also attractive with the weaker currency, he added. Overall, Rieder is staying in the front to the belly of the yield curve because he thinks it’s stable and will continue to perform well. That said, he’s added some interest rate exposure. Specifically, he likes longer-dated municipal bonds. Munis are free of federal tax, and if the issuer lives in the state in which the bond was issued, exempt from state taxes as well. “We feel a lot better about where real rates are now,” he said. “Rates should be well contained.” Rally in complacency While Rieder is all about being innovative to find yield, investors don’t need to sacrifice quality. The average rating in BINC is low single A, which is investment grade, he said. “I’m seeing a rally in complacency,” he said. “When yields come down, people say, ‘Okay, I like keeping these yields where they are,'” he added. “You’re definitely seeing some activity, or people’s willingness to take less collateral, take less structure, pay prices in some areas that I think are … overly aggressive.” (Learn the best 2026 strategies from inside the NYSE with Josh Brown and others at CNBC PRO Live. Tickets and info here .)
