BlackRock Turns Bullish on Short-Term Bonds, Closes US Stock Overweight

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• The BlackRock Investment Institute upgraded US Treasurys to overweight, ending a six-year underweight stance that began in October 2020 when 10-year yields were near 0.9%, favoring short-term government bonds while moving long-term Treasurys to neutral, according to Investing.com. The 10-year yield has risen 110 basis points this year to about 5.25%, which BlackRock called an "unusually attractive entry point" following a rise it attributes mainly to higher real rates rather than inflation expectations.
• BlackRock cut its US equity overweight to neutral, funding part of the bond shift with equity profit-taking, and also reduced exposure to US agency mortgage-backed securities, calling the moves tactical risk management amid a volatile macro backdrop. The firm said it retains structural conviction in the AI transition, still favoring AI-related stocks, listed infrastructure, and emerging-market equities, and projects S&P 500 Q3 2026 earnings growth of about 30% year-over-year.
• The report noted 10-year and 30-year Treasury yields approached their highest levels since 2002 last week before easing on strong auction demand, while concerns over fiscal governance built around French bonds in Europe; investors are now watching September CPI and PPI data for direction on Fed expectations and yields.

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