{"id":439911,"date":"2026-10-13T08:02:14","date_gmt":"2026-10-13T01:02:14","guid":{"rendered":"https:\/\/www.swingfish.trade\/blog\/market-news\/blackrock-cuts-us-stocks-to-neutral-and-buys-treasuries-as-10-year-yield-nears-5-25-439911\/"},"modified":"2026-10-13T08:02:14","modified_gmt":"2026-10-13T01:02:14","slug":"blackrock-cuts-us-stocks-to-neutral-and-buys-treasuries-as-10-year-yield-nears-5-25","status":"publish","type":"post","link":"https:\/\/www.swingfish.trade\/blog\/market-news\/blackrock-cuts-us-stocks-to-neutral-and-buys-treasuries-as-10-year-yield-nears-5-25-439911\/","title":{"rendered":"BlackRock cuts US stocks to neutral and buys Treasuries as 10-year yield nears 5.25%"},"content":{"rendered":"<div>\n<p dir=\"ltr\">BlackRock\u2019s shift adds weight to the case that higher yields are starting to compete with equities for capital, a dynamic that could cap stock valuations even as earnings stay strong. The key swing factor is oil: Middle East war and higher crude prices have driven the sharp repricing of Fed expectations, so any easing in the Iran war would support BlackRock\u2019s view that rate-hike bets are overdone and favour its short-end Treasury call. Conversely, a further oil spike that lifts this week\u2019s CPI and PPI could push yields higher still and test the cushion BlackRock estimates before Treasury returns turn negative. Demand from large allocators at these yields may also help steady the long end after recent volatility, while the trimmed JGB underweight suggests Japanese yields above 3% are drawing more interest.<\/p>\n<p dir=\"ltr\">&#8212;<\/p>\n<p dir=\"ltr\">Earlier:<\/p>\n<ul>\n<li><a href=\"https:\/\/investinglive.com\/stock-market-update\/jpmorgan-says-q3-earnings-will-support-stocks-as-growth-spreads-beyond-ai\" target=\"_blank\" rel=\"follow\">JPMorgan says Q3 earnings will support stocks as growth spreads beyond AI<\/a><\/li>\n<\/ul>\n<p dir=\"ltr\">&#8212;<\/p>\n<p dir=\"ltr\">\nAfter six years of shunning Treasuries, BlackRock is finally buying them and paying for it partly by banking profits on US stocks, without abandoning its AI conviction.<\/p>\n<p dir=\"ltr\">Summary:<\/p>\n<ul dir=\"ltr\">\n<li>BlackRock closed its long-held overweight on US equities, moving to neutral, describing it as a short-term risk-management step in a volatile macro and market environment<\/li>\n<li>The firm said its core convictions on AI transformation remain intact, and it still favours AI-related companies, listed infrastructure and emerging market equities<\/li>\n<li>It upgraded shorter-term Treasuries to overweight and long-term Treasuries to neutral, ending an underweight held for most of the past six years<\/li>\n<li>BlackRock said the 160 basis points of additional Fed tightening priced in since January is overdone, with the 10-year yield up 110 basis points this year to around 5.25%<\/li>\n<li>It estimates a cushion of about 75 basis points against further yield rises over 12 months before Treasury total returns turn negative<\/li>\n<li>The firm also trimmed its underweight on Japanese government bonds and cut US agency mortgage-backed securities to neutral to help fund the shift<\/li>\n<\/ul>\n<p dir=\"ltr\">\nBlackRock has closed its long-held overweight position in US equities, moving to neutral as part of a shift that sees the world\u2019s largest asset manager adding US Treasuries after rising yields made government bonds more attractive.<\/p>\n<p dir=\"ltr\">The firm described the equity downgrade as a short-term risk-management move rather than a change in its core views, saying investors need to be more dynamic in today\u2019s volatile macro and market regime. It said it is also watching growing public attention to AI policy and to the build-out of AI infrastructure across US jurisdictions. BlackRock said its convictions on AI transformation remain intact. It argued that higher rates are increasingly separating companies that can generate returns above their cost of capital from those that cannot, and it continues to favour AI-related companies and listed infrastructure, where strong demand and scarcity support returns. It also kept its overweight on emerging market equities. The move comes even as third-quarter earnings for S&amp;P 500 companies are expected to grow nearly 30% from a year earlier, according to FactSet data cited in the note.<\/p>\n<p dir=\"ltr\">Proceeds from taking profits on US stocks are partly funding a significant upgrade to Treasuries. BlackRock said the 10-year Treasury yield has risen 110 basis points this year to around 5.25%, driven mainly by higher real interest rates rather than inflation expectations or term premium, the extra return investors demand for holding longer-dated bonds. It attributed the rise in real rates to intensifying competition for capital, which is pushing up the neutral rate, and to a sharp reversal in Fed expectations driven by Middle East tensions and higher oil prices. Markets have priced in 160 basis points of additional Fed tightening over the next 12 months since January, which BlackRock considers overdone.<\/p>\n<p dir=\"ltr\">The firm upgraded shorter-term Treasuries to overweight, where it sees the most scope for tightening expectations to unwind, and long-term Treasuries to neutral, saying higher yields now better compensate investors for interest rate risk. BlackRock said it had been underweight Treasuries for most of the past six years, first moving there in October 2020 when 10-year yields were near 0.9%. At current levels, it estimates yields could rise a further 75 basis points over 12 months before total returns turn negative.<\/p>\n<p dir=\"ltr\">In other changes, BlackRock trimmed its underweight on Japanese government bonds, a position held since July 2023 when 10-year yields were around 0.4% to 0.5%, compared with above 3% now. It also cut US agency mortgage-backed securities to neutral.<\/p>\n<p dir=\"ltr\">The firm said it stands ready to add risk again as visibility improves. This week\u2019s US CPI and PPI reports, the first snapshots of September inflation, are likely to shape Fed rate expectations and Treasury yields.\u00a0<\/p>\n<p dir=\"ltr\">\n<p dir=\"ltr\">Who is BlackRock?<\/p>\n<p dir=\"ltr\">BlackRock is the world\u2019s largest asset manager. It looked after a record $15.3 trillion for clients at the end of June 2026, up 22% from $12.5 trillion a year earlier. To put that in context, it\u2019s more than the annual economic output of every country except the United States and China.<\/p>\n<p dir=\"ltr\">The money keeps coming. Clients added a net $192 billion in the second quarter alone, and a record $321 billion in the first half of 2026.<\/p>\n<p dir=\"ltr\">Best known for:<\/p>\n<ul dir=\"ltr\">\n<li>iShares: its exchange-traded fund brand, one of the main ways ordinary investors buy whole markets in a single trade. BlackRock\u2019s ETF assets reached about $6.25 trillion, and Larry Fink said iShares assets have roughly doubled in three years.<\/li>\n<li>Aladdin: its risk-management and investment technology platform, which many other financial institutions also use. Revenue from technology services rose 13% to $566 million in the second quarter, reflecting demand for Aladdin.<\/li>\n<li>Private markets: a growing push beyond stocks and bonds, with private markets assets at $329 billion.<\/li>\n<\/ul>\n<p dir=\"ltr\">Who runs it: co-founder Larry Fink, who started the firm in 1988 and has led it ever since.<\/p>\n<p dir=\"ltr\">Why its calls matter: when a manager this size shifts its views, as it did today by cutting US stocks to neutral and adding Treasuries, the change can steer flows across its model portfolios and is closely watched by other investors as a signal of institutional sentiment.<\/p>\n<p>                            This article was written by Eamonn Sheridan at investinglive.com.<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"<p>BlackRock\u2019s shift adds weight to the case that higher yields are starting to compete with equities for capital, a dynamic that could cap stock valuations even as earnings stay strong. The key&hellip;<\/p>\n","protected":false},"author":216,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[86],"tags":[],"class_list":["post-439911","post","type-post","status-publish","format-standard","hentry","category-market-news"],"_links":{"self":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/posts\/439911","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/users\/216"}],"replies":[{"embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/comments?post=439911"}],"version-history":[{"count":0,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/posts\/439911\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/media?parent=439911"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/categories?post=439911"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/tags?post=439911"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}