BlackRock Chief Investment Officer Rick Rieder said the United States faces a compounding debt problem as higher Federal Reserve interest rates increase the government's financing costs. Each 100-basis-point rate increase adds about $100 billion to federal interest expense, he told CNBC. Despite that fiscal burden, Rieder views a 5% yield on 10-year Treasury bonds as an attractive historical entry point for fixed-income investors. The 10-year yield recently reached about 5.041% on Monday, Sept. 14, its highest level in 19 years and a level not seen since July 2007. BlackRock remains significantly underweight longer-term Treasuries because of supply pressures but has begun buying them selectively. Rieder sees more immediate value in short-duration bonds, highlighting a BlackRock ETF strategy yielding 7.2%, carrying an A- average rating and having duration below three years. He downgraded U.S. equities to a B minus, saying institutional investors can now pursue 7% target returns through relatively stable, low-volatility bonds. He also warned of rollover financing risk for leveraged sectors including real estate and bilateral credit finance. The 30-year Treasury yielded 5.36%, the 10-year 4.99% and the two-year 4.65% at the latest check. TLT fell 0.27% to $80.71 on Tuesday and was down 8.14% year-to-date, while the S&P 500, Nasdaq Composite and Dow Jones were up 10.60%, 11.82% and 7.67%, respectively.