Rick Rieder, BlackRock Inc.’s chief investment officer of global fixed income, said Friday that he favors buying debt maturing in three to seven years, expecting yields will decline as the Fed begins cutting rates, probably around June.

The Fed’s final policy meeting of the year is ahead next week, and while no change in rates is expected, officials Wednesday will update their projections for the coming years for the first time since September. Then, the median forecasts anticipated one more quarter-point hike in 2023 followed by two cuts in 2024. Post-meeting comments by Chair Jerome Powell may further influence market pricing. 

The day before the Fed decision, the government will release inflation readings for November, where the main rate is expected to ebb to 3.1% from 3.2%. A bigger-than-anticipated decline in October helped ignite last month’s massive bond rally. 

In addition, scheduled auctions of three-, 10- and 30-year Treasuries next week on Monday and Tuesday create supply pressure that may temporarily discourage buyers.

The shift in rate-cut expectations is a setback, “but we think people will buy the dip,” said Priya Misra, portfolio manager at JP Morgan Investment Management. “Not many had the opportunity to buy 10-year Treasuries at 5%, but even 4.25% is not a bad level heading into a slowing growth and inflation world.”

This article was provided by Bloomberg News.

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