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BlackRock's Rieder: 'Market doing Fed's job'

Equities still have upside: Pro

With improving economic data, U.S. Treasury yields are continuing their run in 2015. Ten-year bond yields hit highs that haven't been seen since October of last year as investors might be getting out in front of a Fed hike.

That tick up in yields could provide a window for Janet Yellen and the Fed to raise rates, according to one fixed income expert.

Rick Rieder, BlackRock's chief investment officer of fixed income told CNBC's "Squawk on the Street" that "the Fed, when you're normalizing, likes to be behind the marketplace. I think the market is doing the Fed's job."

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And while inflation lingers below the Fed's target, Rieder thinks other factors make this window important for a Fed hike. Negative interest rates existing elsewhere around the world are one invitation, along with the fact that an aging population seeking more income will keep fixed income yields down. Beyond that, he says it's getting harder to ignore strengthening economic data.

"Look at the NFIB report today, the JOLTS data, the payroll report on Friday, there's no ambiguity about strength of employment in the country," he said. "To be at a zero-percent funds rate with $4.5 trillion on the Fed's balance sheet is not the right price today."

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For that reason Rieder is expecting rates will drift higher. In his eyes keeping an easy money policy has already distorted an equilibrium in equities.

"When people say there is no cost to keeping policy easy for an extended period of time, it's just not true," he said, noting historic levels of share buybacks from companies. But that isn't necessarily increasing leveraging risk just yet, as Rieder still seeks an upside in stocks.

According to Rieder, a rate hike would "create equilibrium, more money will flow into longer-term investment and capex ... but no, I don't believe there is a crisis. I just think we should be closer to equilibrium in terms of where policy goes."