The world’s largest asset manager has reportedly turned on US Treasuries.
In a report seen by Bloomberg, BlackRock Investment Institute strategists recently upgraded their view on European government bonds from slightly underweight to neutral, comparing them positively to US government debt obligations.
BlackRock also notes that the Federal Reserve may hold back on cutting interest rates due to sticky inflation, while high budget deficits might urge investors to ask for a higher yield premium to hold long-dated US bonds.
“We prefer euro area government bonds and credit over the US. Yields are attractive, and term premium has risen closer to our expectations relative to US Treasuries.”
The BlackRock strategists specifically highlight bonds from Italy and Spain.
The asset manager isn’t the only financial giant to take a less optimistic view of US Treasuries. Goldman Sachs market strategists also recently lowered…
