Well, if you ever thought the world’s largest asset manager, BlackRock, had a permanent love affair with US Treasuries, think again. It seems they’ve decided to take a stroll on the wild side and are now eyeing European government bonds with a newfound affection. 🤔
According to a report that made its way to Bloomberg, BlackRock’s Investment Institute strategists have upgraded their view on European government bonds from slightly underweight to neutral. They’re practically giving US government debt the cold shoulder, comparing it to a less attractive cousin. 🤷♂️
BlackRock also points out that the Federal Reserve might be a bit hesitant to cut interest rates anytime soon, thanks to that pesky sticky inflation. And with high budget deficits, investors might start demanding a higher yield premium to hold onto those long-dated US bonds. It’s like asking for a bigger tip at a restaurant where the service is just okay. 🍽️
“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 are particularly smitten with bonds from Italy and Spain. It’s like they’ve found a new flavor of ice cream and can’t get enough. 🍦
But BlackRock isn’t the only one feeling a bit disillusioned with US Treasuries. Goldman Sachs, another financial giant, has also lowered its forecasts for US Treasury yields. They’re betting that the Federal Reserve will start cutting interest rates sooner than expected, with cuts potentially coming in September, October, and December. It’s like they’re predicting a sudden change in the weather, and it’s not looking sunny for US bonds. ☁️
The Financial Times recently reported that a whopping $11 billion in US long-term bond funds focused on government and corporate debt were sold off in just three months. That’s a pretty big dump, if you ask me. 💸
This second-quarter sell-off marks the end of a three-year run of net inflows into long-term US bond funds. The last time this happened was back in 2022 Q2, and it’s got everyone scratching their heads. 🤔
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2025-07-09 15:06