BlackRock Investment Institute has upgraded U.S. Treasuries to overweight and cut U.S. equities to neutral, ending a six-year underweight stance on government debt as rising yields offer more attractive returns, according to reports.
The shift puts short-term Treasuries at overweight and long-term Treasuries at neutral. It follows a sharp rise in 10-year Treasury yields, which reportedly surpassed 5.3% to reach their highest level in 24 years a couple of weeks ago. The move reverses an underweight position BlackRock had maintained since October 2020, when 10-year yields were near 0.9%.
BlackRock Investment Institute head Jean Boivin noted that the 10-year Treasury yield’s roughly 110-basis-point increase this year has been driven mainly by higher real interest rates rather than rising inflation expectations. Intensifying competition for capital, tensions in the Middle East and rising oil prices have led markets to price in an additional 160 basis points of Federal Reserve rate hikes over the next 12 months.
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“We think that is overdone,” Boivin wrote, arguing that higher yields now offer an attractive entry point. He said investors have a 75-basis-point cushion against further yield increases before 12-month total returns turn negative. BlackRock sees the greatest opportunity in shorter-term Treasuries as expectations for aggressive rate hikes ease.
To fund the Treasury upgrades, BlackRock closed its longstanding overweight position in U.S. equities, shifted U.S. agency mortgage-backed securities to neutral and reduced its underweight position in Japanese government bonds.
“This is a short-term risk-management move, reflecting our belief that investors must be more dynamic in today’s volatile macro and market regime,” the institute said in its note.
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BlackRock reiterated its confidence in artificial intelligence fundamentals, particularly in critical infrastructure and companies with strong earnings power above their cost of capital. It also maintained an overweight position in emerging-market equities.
The firm reduced its underweight position in Japanese government bonds, which it had held since July 2023, when 10-year yields were around 0.4% to 0.5%, compared with more than 3% now. It also reiterated that it stands ready to add risk again as market visibility improves.
This week’s U.S. consumer price index and producer price index reports, offering the first snapshots of September inflation, are expected to influence expectations for Federal Reserve policy and Treasury yields.
BlackRock, the world’s largest asset manager, managed a record $15.3 trillion in client assets at the end of June 2026, up 22% from $12.5 trillion a year earlier.