BlackRock projects that the Bloomberg U.S. Treasury Index could return as much as 11.6% over the next 12 months if a recession is accompanied by 1.5 percentage points of Federal Reserve easing. The firm also estimates a 6.4% return if rates stay unchanged, 7.2% with 50 basis points of cuts, and 2.5% even if the Fed raises rates by one percentage point. Senior portfolio manager Chi Chen noted that current yield levels provide a buffer, with the 10-year Treasury yield needing to rise roughly 70 basis points before producing a negative total return over one year. The projections follow a 0.7% year-to-date decline in the Treasury index and a 0.9% loss in July through Wednesday's close. BlackRock favors an income-first bond strategy and sees securitized assets as attractively valued, while warning that reducing the Fed's balance sheet could have significant fiscal consequences.
BlackRock IncBlackRock's own projections and strategy are the subject of the article, highlighting its market views and positioning.