I mean, this has been a generational period, I mean, historic. When you think about what's happened in fixed income, you had a dynamic where the Fed was too easy for too long and then all of a sudden had to move so quickly to get rates to these extraordinary levels, hundreds of basis points. Listen, the next few months, we're going to get to a place where the Fed is going to pause. And then you're going to be able to capture yields in the markets that we haven't seen in literally decades. Very exciting. Not just nominal interest rates but real rates. 

We've been living through this period of excess, if you think about it, over 8% year on year inflation. I mean, for years, economies were trying to develop markets. You're trying to create 1%, 2% in Europe, 1% in the US, 2% Japan, anything. Now all of a sudden, you're getting 8%. We've got to bring that down. 

Now, you're going to see something play out over the next few months that you're seeing now. Economy slows. That excessive inflation is going to come down. Freight costs are coming down. Shipping costs are coming down. Inventories for companies, for retailers that are rising, bringing costs down. 

So inflation is coming down. I don't think there's any question inflation's coming down. It's going to come down on a level that's higher than we're used to and then probably stay there for a bit of time. 

So the beauty of fixed income and how it's changed over the last few years, it used to be you had one decision to make. Are you going to buy the credit markets? Or are you going to buy a similar singular decision? Are you going to buy interest rate product? And now all of a sudden, you've had a market that has grown in terms of types of issuance. 

And the pressure you've seen on markets around the world has made it that the regime shift, the idea shift. And you've got to get underneath the surface, understand the research, understand, gosh, there's a secular move taking place in the developed markets or emerging markets. Credit. You want to be high quality versus low quality. We saw in this year three to four regimes in a year. That takes years to play out. 

My sense is that volatility will continue. And alongside of that, the opportunity set becomes robust. So this is a pretty exciting time to be in fixed income. And I think for the next few years, you're going to have an opportunity to really pick up some product at attractive levels, build real income in your portfolio. 

The “income” is back in fixed income

Hear from Rick Rieder, BlackRock’s CIO of Global Fixed Income, as he explains what’s in store for bonds in 2023 and how to take advantage of opportunities amid a new market environment of high interest rates, inflation and volatility.

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I’m up at 3:45 every morning. I want to know where all the markets are. I work out for an hour then the day really gets going.

I’m Rick Rieder, Chief Investment Officer of Global Fixed Income at BlackRock.

So my job is investing money for clients trying to generate returns using fixed income assets within portfolios. From being in this business for 35 years, you learn you got to be thoughtful, you got to innovate, you got to be different, and then apply that to the experience you have and the research that you’re doing.

Education for me is literally the foundation of everything. I’m chairman of the board of North Star Academy. It’s over 14 charter schools, serving 6,000 kids in the city of Newark. We started an internship program to bring high school kids in to help them with not just understanding markets, the economy, finance, but also understanding how you interface in business. We’re helping to change the future of thousands of underserved kids.

It gives you a real boost to see the difference you can make.

There’s a lot to do in a day, but when you start to see what you can get done, I think it’s safe to say that I won’t look back and wish I had slept more.

Meet Rick Rieder: Morningstar’s 2023 Outstanding Portfolio Manager

Rick Rieder, Chief Investment Officer of Global Fixed Income, has been awarded the 2023 Morningstar Award for Investing Excellence, Outstanding Portfolio Manager.1 Rick Rieder’s consistent approach to managing strategies like Strategic Income Opportunities, Total Return, Global Allocation and more have helped funds deliver long-term success.

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