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Investing.com -- Despite recent volatility and Moody’s downgrade of U.S. debt, BlackRock (NYSE:BLK) says U.S. assets remain central to global portfolios.
“We still see U.S. assets as core to portfolios,” the firm wrote in its weekly commentary update.
Moody’s recent credit rating cut highlights long-standing concerns about U.S. fiscal sustainability, including “persistent U.S. budget deficits at a time when higher interest rates are boosting debt servicing costs.”
Still, BlackRock said it expects U.S. assets to retain their central role given the structure of global capital markets and the difficulty of rapid economic reconfiguration.
The S&P 500 has surged 22% from April lows, fueled by a tech-driven rally. BlackRock remains overweight U.S. stocks over a six- to 12-month tactical horizon, citing “U.S. corporate strength and mega forces – big structural shifts like AI that are driving an economic transformation on a par with the industrial revolution.”
While equity markets rebounded, the joint drop in U.S. bonds and the dollar earlier this year stirred debate about the long-term appeal of U.S. assets.
BlackRock disagrees: “The dollar is still historically strong,” and long-term Treasuries, despite a low risk premium, continue to offer value.
Still, BlackRock is preparing for a shifting macro backdrop. “We can no longer anchor views around a single base case,” analysts wrote. The firm has introduced multiple long-run capital market scenarios to adjust portfolio allocations quickly as new data emerges.
The bottom line is that “Economic transformation makes long-term portfolio construction more challenging,” said BlackRock. However, the firm adds that its strategic outlook still starts with “U.S. assets as core to portfolios.”