The management company lowers long-term rates in the new regime.
In light of rising debt and government borrowing, increasing inflation, and the possibility that interest rates will remain high for a lot longer than the market anticipates, Black Rock Inc. says it will steer clear of long-term sovereigns.
Funds love inflation-linked securities.
According to BlackRock, because of ongoing inflation, long-term government debt is no longer serving its traditional function as a portfolio diversifier.
In a study, the company cited long-term sovereign bonds and said, “We envisage investors expecting higher compensation for holding them as central banks tighten monetary policy at a time of record levels of debt.”
BlackRock believes long-term factors will keep pressures above pandemic levels and prefers inflation-linked bonds to protect its portfolio as central banks around the world attempt to limit price increases.