6 hrs ago
BlackRock Backs US Stocks Despite Decade-High Bond Yields
BlackRock thinks US stocks can continue rising even though borrowing money is becoming more expensive.
The firm says companies connected to artificial intelligence are generating strong profit growth.
Those profits may help offset the damage caused by higher bond yields.
BlackRock is especially interested in businesses that provide infrastructure, energy or materials needed for AI.
At the same time, the US government and AI companies are competing for money from investors.
This competition can make loans and investments more expensive.
The Federal Reserve may have less room to cut interest rates because inflation and wages remain high.
Higher oil prices, large government borrowing and debt refinancing could still hurt markets.
BlackRock remains bullish on US stocks despite rising borrowing costs and elevated Treasury yields.
The firm says AI-linked earnings growth is offsetting the pressure higher yields typically place on equity valuations.
BlackRock is focusing on AI-related infrastructure and supply bottlenecks rather than the entire AI trade.
Heavy government borrowing and AI investment are competing for capital, keeping financing costs high.
Oil above $100 a barrel, refinancing pressures and limited Federal Reserve flexibility remain key risks.
- Who
- BlackRock and investors in US equities, with the Federal Reserve influencing interest-rate conditions.
- What
- BlackRock is maintaining an overweight position in US stocks despite rising bond yields, borrowing costs and possible further rate hikes.
- Where
- The main market focus is the United States, with additional inflation risks linked to Middle Eastern energy supplies and the US-Iran dispute.
- When
- The assessment comes from BlackRock’s published Q4 2026 Global Investment Outlook; the article discusses recently elevated yields and oil prices.
- Why
- BlackRock believes AI-driven earnings growth and demand for related infrastructure can outweigh the effects of higher financing costs, although debt, inflation and refinancing remain risks.
Bullish Case
Risks and Headwinds
AI and corporate earnings
Bullish Case
AI-linked companies are driving higher S&P 500 profit expectations, helping stocks absorb rising bond yields better than in 2022.
Risks and Headwinds
The AI boom requires substantial capital, energy and materials, which can increase financing costs and pressure companies needing cash.
Interest-rate outlook
Bullish Case
Strong economic activity and corporate profits may support equities even without near-term rate cuts.
Risks and Headwinds
Sticky inflation, elevated wages and a tightening labor supply could limit Federal Reserve rate cuts or lead to renewed tightening.
Inflation and bond yields
Bullish Case
Energy-supply buffers reduced the crude-price shock from Middle Eastern disruptions compared with initial fears.
Risks and Headwinds
Oil prices above $100, worsening US fiscal health, refinancing needs and a possible rise in term premiums could push yields higher.
Key facts
- BlackRock assets under management
- $15.34 trillion
- Equity view
- BlackRock remains overweight US equities.
- Key support
- AI-linked earnings growth and rising S&P 500 profit expectations
- Bond yields
- US Treasury yields for 10-, 20- and 30-year maturities recently reached decade-high levels.
- Oil prices
- Crude prices remain above $100 a barrel, according to the article.
- Main financing pressure
- US government borrowing and AI investment are competing for capital.
- Source
- BlackRock’s Q4 2026 Global Investment Outlook
Quotes
BlackRock
Asset manager and author of the cited global investment outlook
“We think strengthening economic activity is stoking inflationary pressure, just as wages and underlying inflation stay elevated.”
financialexpress.com
Sources
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