BlackRock downgrades government bonds, keeps faith with stocks By Reuters

© Reuters. FILE PHOTO: A sign for BlackRock Inc hangs above their building in New York


LONDON (Reuters) – The world’s largest asset manager BlackRock (NYSE:) has cut its stance on government bonds, preferring equities in light of the COVID-19 vaccine rollout and potentially up to $2.8 trillion of additional U.S. fiscal spending this year.

In a weekly commentary note, strategists at BlackRock Investment Institute said the firm was increasing its ‘underweight’ on U.S. Treasuries. Yields on U.S. Treasuries, which move inverse to price, have hit their highest levels since February 2020 this week as investors have sold government bonds.

The asset manager also said it was upgrading European stocks to a ‘neutral’, noting that it saw room for the market to close a valuation gap with the rest of the world. It downgraded credit and euro area peripheral bonds and to ‘neutral’.

BlackRock also said it was debuting an ‘overweight’ call on UK equities in the wake of Brexit, while retaining it overweight stance on U.S. and emerging market stocks and underweight on Japanese stocks.

100 and have underperformed global stock market indices since the start of 2016, the year the country voted to exit the European Union.

“We expect our new nominal theme of stronger growth and a muted response in nominal bond yields to higher inflation to further play out, even after significant market moves,” strategists at the BII said in the note.

“This supports our tactically pro-risk stance. A key risk is a further increase in long-term yields as markets grapple with an economic restart that could beat expectations.”

“This could spark bouts of volatility, even though we believe the Fed would lean against any sharp moves for the time being.”

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Be the first to comment

Leave a Reply

Your email address will not be published.