BlackRock cools on US stocks, turns bullish on short-dated Treasuries
The BlackRock Investment Institute has adjusted its stance on US stocks, shifting to a neutral outlook, due to market volatility surrounding artificial intelligence, while simultaneously becoming more bullish on short-dated Treasury notes. This change in perspective, announced on October 12, signifies a notable cautionary tone towards US equities and a stronger endorsement of Treasuries as a secure haven.
In a report, BlackRock's Jean Boivin, head of the Investment Institute, Rick Reider, the firm's Chief Investment Officer for fixed income, and Wei Li, the global chief strategist, explained the shift. BII has been unwinding its long-standing underweight view on US Treasuries, which it held for the past six years. Now, the analysts are overweighting short-term Treasuries, indicating that they believe expectations for interest rate hikes have been overestimated.
Additionally, BII is moving to a more neutral position on longer-dated Treasuries and less negative on Japanese government debt, stating that the risk-reward ratios for investing have improved.
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