BlackRock bond guru: Treasury plan to borrow nearly $1 trillion will have a huge impact on markets

  • "You're putting a tremendous amount of issuance into the marketplace," says Rick Rieder who oversees BlackRock's $1.7 trillion in bond assets.
  • The Treasury Department estimates borrowing needs of $955 billion this fiscal year.

A move by the U.S. Treasury to borrow nearly $1 trillion would have a huge impact on financial markets, BlackRock fixed-income chief investment officer Rick Rieder told CNBC Thursday.

The Treasury Department estimates borrowing needs of $955 billion this fiscal year, which runs from October 2017 to September 2018 for the federal government.

"You're putting a tremendous amount of issuance into the marketplace," said Rieder, who minds $1.7 trillion in bond assets under management at BlackRock. "It's too big."

"People talk about inflation as driving rates higher — definitely, moderately." he said on "Squawk Box." It's also about the amount of supply of Treasurys coming into the market, he added.

Earlier this month, The Washington Post first reported that the Treasury Department released data estimating its fiscal 2018 borrowing needs. The Treasury attributed the increase to the fiscal outlook, while the nonpartisan Congressional Budget Office said it was due to the new tax law, the Post reports.

Rieder said the Treasury's borrowing plan would increase supply in fixed-income markets at time of decreasing demand from the Federal Reserve, which is reducing the size of its portfolio of debt assets, and the European Central Bank, which is extinguishing its bond-buying program this year.

On Thursday, the yield on 10-year U.S. Treasury touched a new four-year high of 2.94 percent amid of new economic data that provided more evidence of inflation pressures.

Rieder first joined BlackRock, the world's largest asset manager with more than $6 trillion of total assets under management, in 2009. He previously served as vice chairman and member of the borrowing committee for the U.S. Treasury. He also served as CEO Officer of R3 Capital Partners.

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