BlackRock Investment Institute Adopts Short-Term Strategies Amid Global Economic Uncertainty
By Davide Barbuscia
NEW YORK (Reuters) -The BlackRock Investment Institute (BII) stated on Tuesday that the increasing uncertainty surrounding traditionally stable, long-term economic trends is prompting a shift towards shorter-term strategies due to a murky global economic outlook.
Historically, markets have relied on fundamental principles like inflation stability, government fiscal discipline, central bank independence, and the safe-haven status of U.S. assets such as the dollar and Treasuries. However, this year has seen investor confidence in these pillars shaken by U.S. tariffs, concerns over the future independence of the Federal Reserve, and a reevaluation of exposure to U.S. assets as President Donald Trump reshapes global trade dynamics.
“Longer term, with macro anchors lost, no one knows where the global economy is ultimately headed,” BII, a division of BlackRock focused on investment research, stated in a mid-year 2025 global investment outlook note.
“That’s why, for now, we invest in the here and now – and lean more on our tactical six- to 12-month horizon,” it added.
The institute’s investment outlooks are derived from insights provided by senior portfolio managers and investment executives at BlackRock, the largest asset manager globally.
BII expressed increased optimism on government bonds in the euro area for the next six to 12 months. In terms of equities, it continues to favor U.S. stocks over their European counterparts.
While higher government spending in Europe may bolster the aerospace, defense, and financial sectors, U.S. stocks are anticipated to outperform due to the artificial intelligence boom and technology demand, despite tariff impacts on the economy, as per BII.
Tariffs and a slowdown in U.S. immigration are expected to maintain upward pressure on inflation, constraining the Federal Reserve’s ability to lower interest rates, BII highlighted.
The institute maintained a bearish stance on long-dated U.S. Treasuries and transitioned from an “underweight” to a “neutral” view on emerging market local currency debt following a 10% decline of the dollar against major currencies this year.
“The potential for further U.S. dollar depreciation and a more positive outlook for emerging market (EM) growth render local currency EM bonds more appealing within a comprehensive portfolio context,” it concluded.
(Reporting by Davide Barbuscia; Editing by Anna Driver)
