BlackRock Strategists Shift to Hold on Short-Term U.S. Treasuries, Favoring Mid-Term Bonds

PANews reported on September 16th that BlackRock strategists have shifted their stance on short-term U.S. Treasuries from overweight to hold. They believe the market's bet on a large rate cut by the Federal Reserve is unlikely to succeed. Given the relatively high yields on U.S. Treasuries, BlackRock strategists favor mid-term U.S. Treasuries with maturities of 5 to 10 years.

Wei Li, the firm's Chief Investment Strategist, stated that speculation about the Federal Reserve waiting too long to ease policy and being forced to accelerate rate cuts to boost the economy is incorrect.

In an interview, Li said she expects the Fed to cut rates by 25 basis points on Wednesday. She added, "We think the market is pricing in a little bit too much depth to the easing cycle. The easing cycle is starting, but it may not be as large as the market is pricing in."

While acknowledging that recession risks have likely increased, Li said her base case remains for a U.S. economic slowdown rather than a contraction. She highlighted that policymakers remain cautious about "persistent" inflation in certain areas of the economy. She explained, "What we're seeing is the U.S. economy creating an average of 164,000 jobs per month in the last six months, which is still a pretty robust pace."