(Bloomberg) — BlackRock Inc. strategists turned underweight short-dated US Treasuries from overweight, saying the extent of Federal Reserve interest-rate cuts the market is betting on is unlikely to pan out.
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Wei Li, the firm’s chief investment strategist, said speculation that the Fed waited too long to ease and will now be forced to cut at an accelerated pace to shore up the economy is misplaced. In an interview with Bloomberg TV, she said she expects the Fed will lower rates by 25 basis points on Wednesday.
“We think markets are a bit excessive in pricing the depth of the rate-cut cycle,” Li said. “The cutting cycle is starting, but maybe not as deep as markets seem to be pricing.”
The yield on the policy-sensitive two-year note traded near the lowest since September 2022 on Monday — a rally that doesn’t tempt Li.
The strategist favors Treasuries with intermediate maturities known as the belly of…
