Morning Edition · Tue 13 Oct 2026
BlackRock Upgrades Treasuries, Saying Markets Have Overpriced Fed Hikes
The BlackRock Investment Institute upgraded US Treasuries on Monday, moving short-term bonds to overweight, and funded the shift partly by cutting US equities to neutral.
Chanan Zevin - Chief Editor and Head of Desks
Published
Ending a six-year underweight
BlackRock is upgrading shorter-term Treasuries to overweight and long-term Treasuries to neutral, the BlackRock Investment Institute said in its weekly commentary published on October 12. It first went underweight long-duration Treasuries in October 2020, when the 10-year yield was near 0.9%.
The 10-year yield has risen 110 basis points this year to around 5.25%, driven mainly by higher real rates, BlackRock said. Since January, markets have priced in 160 additional basis points of Fed tightening over the next 12 months. “We think that is overdone,” the institute wrote.
A cushion against higher yields
At current yields, BlackRock's analysis suggests a 75-basis-point cushion against further yield increases over 12 months before total returns turn negative. It sees the greatest scope for tightening expectations to unwind at the short end of the curve, according to the commentary.
Equities cut to neutral
BlackRock said it is bringing US equities from overweight to neutral as a short-term risk-management move, while still favouring AI and technology. It also trimmed its underweight in Japanese government bonds, with 10-year JGB yields above 3% compared with 0.4%-0.5% in July 2023. “We are managing risk, not changing our core convictions,” global chief investment strategist Wei Li said.