NEW YORK (Reuters) - BlackRock Chief Executive Larry Fink said on Tuesday that U.S. financial markets are “probably fully priced at this moment,” and that second-quarter earnings and growth could disappoint investors.

Larry Fink, Chief Executive Officer of BlackRock, takes part in the Yahoo Finance All Markets Summit in New York, U.S., February 8, 2017. REUTERS/Lucas Jackson

Fink, who spoke at a conference in an interview by Deutsche Bank AG Chief Executive John Cryan, said that businesses in the current quarter are not seeing the acceleration the markets are expecting.

He also pointed to the flattening yield curve as a sign that bond markets reflect less optimism for economic growth than stocks do.

A flattening yield curve refers to a decline in the premium investors demand for longer-dated U.S. government bonds over those maturing sooner. After spiking following the November U.S presidential election, that spread between short- and long-term bonds has declined.

“The rates markets are saying something entirely different from equity markets,” Fink said.

“Rates are not going to go up as much as, I think, consensus, which is probably consistent with an equity market that is not going to go as fast as people think either.”

But Fink said the low reading on the closely followed CBOE Volatility Index, sometimes called the fear index, is a sign of capital market strength and the amount of cash that investors have stockpiled and can use to buy when markets sell off.

That index remains below its long-term average.

Fink said the stock rally since the election had at least been partly validated by strong first-quarter earnings growth as well as political stability in Europe after centrist victories in elections in the Netherlands and France.

But he said it remained unclear what impact the forthcoming British exit from the European Union would mean for the finance industry.