BlackRock Investment Institute: 'Pockets of value' restored in bond markets

Declining macro outlook

Lauren Mason
clock • 2 min read

BlackRock Investment Institute’s research team has upgraded its outlook for European government bonds and investment grade credit amid the “worsening macro outlook”, in a move that has “nudged down risk” across its asset allocation.

BII said the commodities price shock and growth slowdown in China also led to a downgrade of Chinese assets and Asia fixed income. "We see little chance of a perfect economic scenario of low inflation and growth humming along," the team warned. "Last week's market rout shows investors are adjusting to this reality." While BII pointed out bonds are "generally not attractive in inflationary times" and it therefore remains "well underweight" the asset class, it believes the broad-based sell-off experienced year to date has "restored some value in pockets of the market". "First, we hav...

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