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BlackRock’s Rick Rieder says get ready for rates to move even higher in the second half of the year

Fred Imbert

Treasury yields have been on a tear higher recently and will likely continue to zoom ahead in the second half of 2018, BlackRock's Rick Rieder said Monday.

"We think rates will move higher, but more so in the latter part of the year," Rieder, BlackRock's global chief investment officer of fixed income, told CNBC's " Halftime Report ." He noted that economic growth tends to pick up later in the year and that could push rates higher.

"If you look at seasonality of [economic] growth, the first quarter has been weak for seven or eight straight years, and the Treasury is going to issue so much supply into the marketplace. I think that's what will cause rates to move higher," Rieder said.


Strategists on Wall Street expect the Treasury Department to issue up to $1 trillion in debt during the second half of the year.

"We're going to have to adjust a lot of supply in the second half at the same time the economy is going to move in what's going to be a more robust way," Rieder said.

The benchmark 10-year Treasury yield rose to 2.99 threatening once again to reach 3 percent. The benchmark rate last traded at 3 percent or higher in January 2014. Investors have been selling Treasurys this month — pushing yields higher — amid expectations of rising inflation, which could prompt the Federal Reserve to tighten monetary policy at a faster pace.

According to the Fed's economic projections, the central bank expects to raise rates three times by year-end. However, market expectations for a fourth rate hike in December rose to 48 percent Monday, according to the CME Group's FedWatch tool.

Rieder said he does not expect the Fed to tighten monetary "any faster," however.