As the Federal Reserve injects billions into the U.S. Treasury market to absorb record debt issuance, BlackRock's Rick Rieder warns that the real upside remains in stocks.

Fed’s Quiet Bond Accumulation

“The Federal Reserve is loading up on US Treasuries,” noted The Kobeissi Letter, citing FRED data, revealing that the central bank has purchased $237 billion in Treasuries since December.

This aggressive accumulation pushes the Fed’s total Treasury holdings to $4.4 trillion—the highest level since July 2024. Treasuries now make up nearly 66% of the Fed's swelling $6.7 trillion balance sheet, signaling that the central bank is actively “propping up the Treasury market.”

This massive intervention acts as a necessary shock absorber against an unrelenting flood of government debt. Rieder, BlackRock’s Chief Investment Officer of Global Fixed Income, highlighted this intense pressure, noting the bond market is grappling with “$520 billion a week of trade of gross supply of Treasuries.”

The Federal Reserve is loading up on US Treasuries:

The Fed's total Treasury holdings are now up to $4.4 trillion, the highest since July 2024.

Since December, the central bank has bought +$237 billion in Treasuries.

As a result, Treasuries now account for 65.9% of the Fed's… pic.twitter.com/hNzFOPwlVY

— The Kobeissi Letter (@KobeissiLetter) May 6, 2026

Stark Market Disconnect

Despite the central bank’s implicit support of the bond market, Rieder sees far more potential for investors elsewhere. “Equities have a whole lot more upside than… interest rates do today,” he stated in a Bloomberg interview.

Rieder attributes this disconnect to vastly different supply-and-demand technicals. While the bond market is drowning in new issuance, the stock market faces a structural shortage.

“We don’t create enough stocks,” Rieder explained, pointing out that corporate share buybacks drastically outpace initial public offerings. Combined with immense sideline cash, this creates a relentless bid for equities.

Navigating A Fractured Economy

Underpinning this market dynamic is a deeply divided U.S. economy. While traditional manufacturing and housing are effectively “in recession,” Rieder notes the broader economy is steaming ahead, fueled by massive AI investments and resilient high-income consumption.

Because these rate-sensitive, lower-income sectors are struggling, Rieder anticipates the Fed will eventually cut rates. However, he remains cautious about extending the duration in bonds just yet.

While he predicts the 10-year Treasury yield will eventually fall to 4%, BlackRock intends to wait in the “belly of the yield curve” until real motivation around lowering mortgage rates materializes.

Change In 10-Year Treasury Yields Over 15 Years

Based on the data from the Federal Reserve Bank of St. Louis, here are the percentage changes in 10-year Treasury yields as of May 4, 2026, when the yield was 4.45%.

The most widely recognized and traded ETF for tracking the 10-year yield curve is the iShares 7-10 Year Treasury Bond ETF (NASDAQ:IEF). It is down 2.02% year-to-date, 2.16% over the last six months, and up unchanged over the last year.

Lookback Period	Historical Date	Historical Yield On 10-Year Treasury	Percentage Change	Absolute Change
5-Year	May 4, 2021	1.61%	+176.40%	+2.84 pp
10-Year	May 4, 2016	1.79%	+148.60%	+2.66 pp
15-Year	May 4, 2011	3.25%	+36.92%	+1.20 pp

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