BlackRock, the world’s largest asset manager with more than $15.3 trillion in assets, has shifted its U.S. equity stance from overweight to neutral and upgraded U.S. Treasuries from neutral to overweight. The reversal follows a period in which the firm had held an underweight position in U.S. government bonds for most of the past six years. BlackRock is particularly favoring shorter-term Treasuries, where it sees scope for excessive market expectations of further Federal Reserve rate increases to ease.
The firm said the 10-year Treasury yield has risen about 110 basis points this year to around 5.25%, while 10-year and 30-year yields have reached levels last seen in 2002. Higher energy costs linked to the Middle East conflict have contributed to the move. BlackRock estimates markets are pricing in an additional 160 basis points of Fed hikes over the next 12 months, a level it considers too aggressive, and calculates that Treasuries have a 75-basis-point cushion before total returns turn negative over the next 12 months.
BlackRock described the reduction in U.S. equities as a short-term risk-management decision amid policy uncertainty and possible volatility around the artificial-intelligence build-out. It remains constructive on AI-related companies and technology stocks, saying higher rates are distinguishing companies that can generate earnings and returns above their cost of capital. FactSet analyst estimates show S&P 500 third-quarter earnings are expected to grow about 30% year over year.
For digital assets, the shift refocuses attention on Treasury yields, Federal Reserve expectations and risk appetite. The analysis highlighted five blockchain assets to watch: Sei, Ethereum, NEAR Protocol, Hedera and Story. Sei is oriented toward trading infrastructure and decentralized finance; Ethereum remains a key measure of crypto demand through smart contracts, DeFi and stablecoins; NEAR Protocol’s outlook depends on developer participation and ecosystem expansion; Hedera’s enterprise blockchain activity matters; and Story focuses on blockchain-based intellectual property and programmable rights.
BlackRock’s repositioning does not establish that a cryptocurrency rally is approaching, and the report cautioned that none of the five assets is guaranteed to benefit from changing financial conditions. Still, traders may treat the bond and equity shift as a signal about broader risk appetite across financial markets.
