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UPDATE 1-Stocks, Junk Bonds Could gain Despite Slowing U.S. Growth -BlackRock's Rieder

Wednesday, 09 Mar 2016 09:00 AM

(Adds Rieder quotes, context and byline)

By Trevor Hunnicutt

NEW YORK, March 8 (Reuters) - Stocks "can go up five, 10 percent, maybe" despite a slowing U.S. economy, BlackRock Inc's chief investment officer of global fixed income Rick Rieder said on Tuesday.

The market's negative attitude towards the high-yield corporate debt market - relative to higher-grade debt - has also created an investment opportunity, Rieder said at the Harbor Investment Conference in New York.

He said a rally in gold could continue as central banks push interest rates globally into negative territory, which erodes investors' savings.

Investors are expecting the European Central Bank to announce more monetary stimulus measures on Thursday to boost ultra-low inflation and sluggish growth in the euro zone.

"Gold is mispriced by two or three hundred euros if we're going to go down the road of growing the balance sheet" of the central bank, he said. "Money is going to go into gold."

Rieder also expects the U.S. Federal Reserve to hike the benchmark interest rate it controls one or two times this year, he said on CNBC, including once in June. And he said the bank's use of an aggressive stimulus policy called quantitative easing, or Q.E., is not out of the question.

"I hear people speak about the Fed may ultimately do Q.E. again; I don't think that's a crazy concept," said Rieder, whose recent remarks on the U.S. economy had been more optimistic. "The world is slowing. I think the U.S. economy is going to slow."

That growth is slowing in part because of a rising U.S. dollar, which hurts emerging markets that had borrowed in that currency, Rieder said.

The BlackRock Strategic Income Opportunities Fund, a mutual fund managed by Rieder, cut all of its net exposure to the euro, Japanese yen and British pound in February, according to a BlackRock report on Tuesday.

New York-based BlackRock oversees $4.6 trillion in assets globally, as of Dec 31, 2015, with a third of those assets held in fixed-income products. (Reporting by Trevor Hunnicutt; Editing by Bernard Orr and Cynthia Osterman)

© 2017 Thomson/Reuters. All rights reserved.

 
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