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Exclusive: BlackRock's Outlook On Interest Rates

With the Fed raising the discount rate many investors found themselves in a panic; confused about what happens with consumer rates.

Of course the discount rate only applies to emergency loans; in fact the Fed was careful to say there’s to be no immediate change for households or businesses.

One asset manager who did not lose his cool amid the chaos was BlackRock’s Curtis Arledge.

“What we saw from the Fed was not surprising,” he says. “but the market was a little surprised by the timing. I think we’ve learned when Ben Bernanke says he’s going to do something we probably shouldn’t sit and wait around for it.”

Arledge is Blackrock's chief investment officer of active fixed income -- he manages nearly $600 billion and he’s confident about what to expect.

He tells the desk that when the brain trust that is BlackRock sat down for their morning meeting on Friday and talked about the outlook for interest rates they decided a few key things.

“Our general view is that the market is looking for higher rates,’ he says. “The market is building in 50 basis points higher in the 10-year Treasury.”

But what the market expects and what the market gets may be two different things. Arledge also tells the desk:

”My personal view is that we don’t see a hike in the fed funds rate this year - early 2011 perhaps.” I think the sustainability of the growth (remains in question) we’re in a period of sideways for a while.”

“I don’t hold the view that we have runaway inflation. We still have significant credit mechanism issues.”

What’s the bottom line: I don’t believe the Fed is going to be moving this year, concludes Arledge.

*You can find our entire interview with BlackRock’s Curtis Arledge about 8 minutes into the Word on the Street video above.


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Trader disclosure: On February 19, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (NUE), (BTU); Kelly Owns (AMZN) Calls; Kelly Owns (JPM); Kelly Owns (FXE) Puts; Kelly Owns (ELX) Call; Kelly Owns (QLGC); Jon Najarian Owns (AAPL), Is Short (AAPL) Calls; Jon Najarian Owns (AMZN), Is Short (AMZN) Calls; Jon Najarian Owns (BAC); Jon Najarian Owns (BBY), Is Short (BBY) Calls; Jon Najarian Owns (C); Jon Najarian Owns (CAT), Is Short (CAT) Calls; Jon Najarian Owns (FCX), Is Short (FCX) Calls; Jon Najarian Owns (GS), Is Short (GS) Calls; Jon Najarian Owns (HD), Is Short (HD) Calls; Jon Najarian Owns (HPQ), Is Short (HPQ) Calls; Jon Najarian Owns (MS); Jon Najarian Owns (PCLN), Is Short (PCLN) Calls; Jon Najarian Owns (RSH); Jon Najarian Owns (SBUX), Is Short (SBUX) Calls; Jon Najarian Owns (WMT), Is Short (WMT) Calls; Schiff Owns (POT); Schiff Owns Gold; Schiff Is Short U.S. Dollar; Kaminsky Owns (EPV); Terranova Owns (JPM), (RIMM), (IBM), (QCOM), (GOOG), (EMC), (AAPL), (DELL), (MSFT)’ Terranova Owns Crude Oil Futures (March 2010, April 2010, December 2011, December 2012)

For Joe Terranova
Terranova Works For (VRTS)
Terranova Is Chief Market Strategist Of Virtus Investment Partners, Ltd.
Virtus Investment Partners Owns More Than 1% Of (CLB)
Virtus Investment Partners Owns More Than 1% Of (DLR)
Virtus Investment Partners Owns More Than 1% Of (EXR)
Virtus Investment Partners Owns More Than 1% Of (IGE)
Virtus Investment Partners Owns More Than 1% Of (XLY)
Virtus Investment Partners Owns More Than 1% Of (DBV)
Virtus Investment Partners Owns More Than 1% Of (XLP)
Virtus Investment Partners Owns More Than 1% Of (XLB)
Virtus Investment Partners Owns More Than 1% Of (XLI)
Virtus Investment Partners Owns More Than 1% Of (SKT)

For Brian Kelly
Kanundrum Capital Is Short Euro
Kanundrum Capital Is Short Yen
Kanundrum Capital Is Short Copper
Kanundrum Capital Owns (GDXJ)
Kanundrum Capital Owns 9MOS)
Kanundrum Capital Owns (POT)
Kanundrum Capital Owns (IPI)
Kanundrum Capital Owns (GLD)
Kanundrum Capital Owns (C)
Kanundrum Capital Is Short (FCX)

For Robert Samuels
Oppenheimer & Co. Is A Market Maker In (FINL)
Oppenheimer & Co. Expects To Receive/Seek Investment Banking Compensation Frmo (UA) In Next 3 Months

Other Relevant Disclosure
Jon Najarian Owned (GOOG) On 1/21/10
Terranova Owned March British Pound Futures On 1/29/10
Kanundrum Capital Owned (GOOG) Calls On 1/13/10
Kelly Owned (GOOG) On 1/13/10

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