"The new toy in the world of monetary policy is we're going to negative rates," Rieder told CNBC's "Squawk Box" ahead of day one of Fed Chair Janet Yellen's semiannual congressional testimony on the economy. "I don't think the Federal Reserve is in a thought process of negative rates today."
The Fed may not be thinking about negative rates for the U.S., but wants to be prepared just in case. The central bank's annual stress test is asking banks to examine the possibility of negatively yielding Treasury rates. The yield on the 10-year Treasury was about 1.765 percent in early Wednesday trading.
Yellen is expected to try to balance the Fed's stated goal of raising interest rates against the risks of a weaker global economy. She appears before the House Financial Services Committee at 10 a.m. ET, and before the Senate Banking Committee on Thursday morning.
In written remarks, released ahead of the hearing, Yellen said the future for rates depends on the economic data, and that a lower rate path would be appropriate if the economy falters.
Conditions were likely to warrant gradual rate hikes, she said, acknowledging the risk of China's slowdown could pose for the U.S. economy.
When the Fed increased rates from near zero percent for the first time in December in more than nine years, policymakers projected four more hikes in 2016. But the dismal start of 2016 on Wall Street, plunging oil prices and concerns about China's economy have tempered market expectations for such an aggressive path higher.
"The U.S. economy is slowing," said Rieder, BlackRock's global fixed income CIO. "Clearly the global economy is slowing. I think it's going to be hard for the Fed to go many times this year, if at all."
"I think we've seen the best of U.S. growth," he continued. "[But] I think people understated how the U.S. economy did for the last three or four years. It created 8 million jobs in three years [and] 18 million car [sales]. The homes sales were pretty solid."
The Fed should have started raising rates two years ago, he argued.
Looking forward, Rieder handicapped whether June might be on the table for a rate hike.
"If you think about the next press conference is June, there are four pieces of employment data to come out. There are four pieces of CPI. There are four pieces of core PCE," he continued. "There's an awful lot of data."