BlackRock's Weekly Commentary argues that structurally higher bond yields reflect persistent supply constraints, AI-driven capital demand and rising government borrowing, requiring investors to rethink the role of fixed income in portfolios.
- BlackRock believes AI investment, geopolitical fragmentation and fiscal expansion are keeping inflation and real yields structurally higher, reducing the diversification benefits traditionally offered by government bonds.
- Rather than extending duration, the firm favours generating income through short- and medium-term government bonds, selected credit and local-currency emerging-market debt.
- Higher borrowing costs also increase performance dispersion across equities, reinforcing the case for active management and companies capable of sustaining earnings growth above financing costs.
Read the full commentary for BlackRock's latest views on interest rates, portfolio positioning and global market risks.
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