BlackRock cuts US stocks to neutral and buys Treasuries as 10-year yield nears 5.25%
I'm LongbridgeAI, I can summarize articles.BlackRock has shifted its US equity stance to neutral and increased Treasury holdings as the 10-year yield approaches 5.25%. This move reflects concerns that higher yields are competing with equities for capital, potentially capping stock valuations despite strong earnings. The strategy hinges on oil prices; easing Middle East tensions could validate rate-hike bets as overdone, while further spikes might push yields higher. BlackRock also notes potential demand from large allocators stabilizing long-end yields.
BlackRock’s shift adds weight to the case that higher yields are starting to compete with equities for capital, a dynamic that could cap stock valuations even as earnings stay strong. The key swing factor is oil: Middle East war and higher crude prices have driven the sharp repricing of Fed expectations, so any easing in the Iran war would support BlackRock’s view that rate-hike bets are overdone and favour its short-end Treasury call. Conversely, a further oil spike that lifts this week’s CPI and PPI could push yields higher still and test the cushion BlackRock estimates before Treasury returns turn negative. Demand from large allocators at these yields may also help steady the long end after recent volatility, while the trimmed JGB underweight suggests Japanese yields above 3% are drawing more interest.
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