2023-10-17 08:50:06
BlackRock Inc., the world’s largest asset management company, issued a report on Monday (16th), maintaining a tactical neutral stance on U.S. debt but continuing to reduce its long-term strategy.
BlackRock noted that the U.S. 10-Year Treasury Bond YieldBeing at a 16-year high indicates that they have made a big adjustment, and although the volatility has been too sharp and too large for the near term, they expect that the process is not over yet.
BlackRock has been reducing its holdings of long-term U.S. Treasuries since late 2020 due to concerns that yields will not be able to withstand rising inflation and rising debt levels. Although the Federal Reserve’s interest rate hike path is close to its peak, considering that higher interest rates will last longer, BlackRock does not consider increasing its holdings of U.S. debt, but maintains a reduction in its holdings from a long-term strategic perspective.
The market expects that the Federal Reserve will continue to keep interest rates high for a long time in 2024.And the possibility of increased supply to fund government deficits amid weak auction demand helped boost 10-Year Treasury Bond Yieldrose to 4.90% and pushed the 30-year Treasury yield above 5% last week.
“We now see an equal chance of Treasury yields moving in either direction,” BlackRock said. “In other words, we see moves in both directions going forward.”
Wei Li, BlackRock’s global chief investment strategist, pointed out that although there is more room for the term premium to recover, a lot of interest rate repricing has already occurred. “In the long term,10-year yieldIt could be 5% or higher.”
BlackRock said that while the downturn in economic activity has opened the door to potential monetary policy adjustments, for now they still believe that the Federal Reserve will tighten policy to deal with inflationary pressures.
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