Fed favorite Rick Rieder manages a $2.4 trillion BlackRock portfolio—and knows more about the bond market than anyone in America

In the last two weeks, Rick Rieder’s odds on Polymarket of becoming the next Fed chair have surged from low-single digits to nearly 50%, putting the veteran Wall Streeter far in the lead over second and third place candidates Kevin Warsh (29%) and Christopher Waller (6%). Rieder would bring a highly unusual background to the job. The current chief Jerome Powell is a former lawyer, private equity partner, and Treasury official, while his predecessors Ben Bernanke and Alan Greenspan were PhD economists (the former a Princeton professor, the latter a consultant and policy adviser). By contrast, Rieder’s spent his career as a hands-on, daily participant in the global bond markets, as a trader and asset manager, expert at parsing and profiting from the Central Bank’s cues.

In simple terms, no one knows more about the bond market than Rick Rieder. And nothing’s a bigger deal in Trump’s policy decisions than what makes the bond market thrive or tank—witness his reversal of the tariff threat versus Europe over Greenland after investors dumped Treasuries and rates spiked.

Who is Rick Reider and how did he catch Trump’s eye?

Today, Rieder heads the Global Fixed Income franchise at BlackRock, overseeing a $2.4 trillion portfolio that’s comprises one dollar in six of the $14 trillion entrusted to the world’s largest asset manager. According to sources interviewed for this story, who chose to speak anonymously, Rieder’s ear-to-the-market approach offers major advantages. “It would be helpful to have someone who’s had skin in the game,” says a prominent quant fund manager. “It may be better to have someone with humility who’s lost money through these cycles and lets the market dictate, rather than these academic chairs.” A former CEO who’s worked with Rieder calls him “extremely personable,” and avows that Rieder “knows how markets work, and would be independent in his judgments.”

Rieder will face an extremely tough outlook if he takes the reins in May. We already know where he stands on the future of the Fed Funds rate, and he’s in the Trump camp. In a CNBC interview on January 12, he stated that “The Fed’s got to get the rate down to 3% [versus 3.50% to 3.75% today]. I think that’s closer to equilibrium.” The rub: The Fed is already embracing two policies that promise to put inflation on an higher track. First, in mid-December, the Central Bank reversed its long-standing policy of Quantitative Tightening, purchasing Treasuries to reduce the money supply, curb demand and hence dampen the upward trend in consumer prices, and returned to Quantitative Easing. It was QE—buying government bonds at a pace of $40 billion a month using digitally created trillions—that flooded the economy with too many dollars, and helped ignite Big Inflation that followed the pandemic. Second, the Fed’s also lowering the cash cushions that banks must park at the Central Bank as reserves. That move frees up a ton of formerly idle deposits for lending on everything from car loans to data centers.

“Even before those shifts, the inflation genie wasn’t out of the bottle,” says Steve Hanke, a professor of applied economics at Johns Hopkins University. “The 10-year Treasury yield is stuck at 4.2% to 4.3%, and the most recent CPI reading is 2.7%, well above the Fed’s target of 2.0%.” Hanke observes that the combination of QE ramping the money supply, and the de-tightening that enables banks to swell their loan books, will plant the roots of more inflation to come. A reduction in Fed Funds rate would add to the loosening regime, making the outlook even worse. Yet that’s what Rieder’s recommended.

Here’s where it gets tricky. At first, that triple dose of dovish measures would push short-term rates down—QE does that by artificially boosting sales of Treasuries (pushing prices higher and hence reducing yields), and the more bank credit out there, the bigger the supply and the lower the rates. So in the early days of a Rieder regime, that course would win applause from Trump, and even look good to voters for a while. “But inflation after a lag would roar back” as all that extra credit courses through the system, says Hanke, pushing both short and long-term rates far higher than today’s levels.

Taking the easy-money route would produce a dangerous knock-on effect. Financing our $31 trillion in debt would get a lot more expensive, and interest costs already reached $1 trillion in FY 2025, absorbing one dollar in seven of all federal spending, around two-thirds as much as Medicare. That scenario could send the bond vigilantes on the warpath versus U.S. bonds. “We haven’t seen any such attacks yet,” says Hanke. “But I detect that a pivot away from Treasuries may be starting internationally. It’s not a big deal so far, but having the Danish pension funds dump our bonds is a danger signal.”

Here’s where naming a Wall Street pro who’s a master of spotting where danger’s building may prove a hedge against a future calamity. Rieder’s been studying the forces that move the bond market for decades. It may well be that he’s better prepared to see the forces assembling, and more willing make the politically difficult choices that keep the vigilantes at bay, than the PhDs and Treasury officials who came before.

This story was originally featured on Fortune.com