According to Rick Rider, chief investment officer of global fixed income at BlackRock, there is an “epic” amount of cash on the sidelines as investors assess the slowing US economy and the debt-ceiling debate in Washington. “I’ve never seen so much money sitting in cash,” Ridder said Tuesday in his New York office during a BlackRock media briefing on the markets and the firm’s new, actively managed exchange-traded funds.
related to: Debt-ceiling deal will spark new worry: Who will buy flood of Treasury bills? Reader is the lead portfolio manager of the new BlackRock Flexible Income ETF BINC, +0.04% , the first active ETF managed by Reader, BlackRock said in a statement Tuesday. Ryder said during the briefing that he sees a “very high probability” that a debt-ceiling deal is struck before a deadline by Congress to withdraw it or face the possibility that the US will soon run out of cash to pay all its bills. . The US A default on its debt would cause “significant” market disruption, as Treasury bills are used as “collateral” globally, he said. Read: Debt-ceiling sends Treasury bill yield toward 6% As portfolio manager of the BlackRock Flexible Income ETF, Ryder said he is targeting a yield of “just under 7%.” The rise in interest rates over the past year has made it possible to target such yields in the debt market with less risk than was needed at the end of 2021, according to Reeder. It plans to invest opportunistically, including areas that are difficult for many investors to access in the “complex” fixed-income market, such as exposure to mortgage and collateralized loan obligations. According to him, the US economy is in “better shape” at this point in the cycle than many give it credit for. While growth is slowing, Reeder said he does not see a “deep recession” imminent, citing the low unemployment rate, wage growth and increased savings in the economy. He expects the Federal Reserve to hold off on raising rates at its next policy meeting, as inflation is easing even as it remains “sticky” in core services. The Fed has raised rates aggressively over the past year to bring down high inflation. “I think we’re getting to the end of the process,” Reeder said. Meanwhile, BlackRock has expanded its active ETF lineup in equities, also announcing Tuesday that Tony DiSpirito is the lead portfolio manager for its new BlackRock Large Cap Value ETF BLCV, -0.99% . Active ETFs are one of the fastest-growing sectors of the exchange-traded fund market, Rachel Aguirre, head of US iShares product at BlackRock, said at a media briefing on Tuesday. It’s still “early bets,” she said. US stocks closed lower on Tuesday amid debt-ceiling concerns. The Dow Jones Industrial Average DJIA, -0.69% fell 0.7%, while the S&P 500 SPX, -1.12% shed 1.1% and the technology-heavy Nasdaq Composite COMP, -1.26% shed 1.3%, according to FactSet data. In bond markets, the yield on the 10-year Treasury note TMUBMUSD10Y, 3.694% fell 2.1 basis points to 3.696% on Tuesday, while the 2-year Treasury yield TMUBMUSD02Y, 4.262% rose 1.4% to 3.3%. Jones Market Data. Treasury Secretary Janet Yellen expects the so-called “X-date,” when the US risks breaching its debt ceiling and running out of cash, to arrive as early as June 1. Read: ‘Doomsday machine’: Here’s what could happen if the debt ceiling is breached
