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BlackRock Says Market Is ‘Too Aggressive’ in Pricing in Rate Cut

Ben Bartenstein
BlackRock Says Market Is ‘Too Aggressive’ in Pricing in Rate Cut

(Bloomberg) -- Investors are “too aggressive” in their expectation that the Federal Reserve will cut rates sometime this year, according to BlackRock Inc.

Scott Thiel, BlackRock’s chief fixed income strategist, said it’s a case of money managers overreacting to geopolitical noise, such as U.S.-China trade tension. The implied probability of the Fed lowering borrowing costs in 2019 is more than 70%, data compiled by Bloomberg show.

“It looks a bit extreme now in terms of the amount of easing priced in, given the fundamental situation and what we got yesterday on what the Fed thinks about the economy,” Thiel said on Bloomberg TV.

Thiel said he likes to own U.S. Treasuries because of the balance they offer investors in a portfolio.India’s election should boost market sentiment, buoyed by optimism over Prime Minister Narendra Modi’s efforts to fix the nation’s banking system. Still, growth must be delivered in order for the stock market to move materially higher, he said.

--With assistance from Francine Lacqua.

To contact the reporter on this story: Ben Bartenstein in New York at bbartenstei3@bloomberg.net

To contact the editors responsible for this story: Julia Leite at jleite3@bloomberg.net, Alec D.B. McCabe

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