A “real and broadening” global economy restart is underway, with the US “handing over the baton” to Europe and other developed markets, even if the delta variant of COVID-19 is challenging for emerging economies, according to BlackRock’s research arm represents Inc., the world’s largest asset manager.
BlackRock BLK, + 0.74%,
which had approximately $ 9.5 trillion in assets under management in the second quarter is widely pursued due to its dominant role in financial markets. The views were published in a weekly commentary by the BlackRock Investment Institute on Monday.
The company’s comment comes undefined as a report showing record job openings in the US
for June helped raise government bond yields, pushing the 10-year TMUBMUSD10Y rate from 1.319% to 1.30%. Until recently, US and global bond rates in general have been on a steady downtrend – accompanied by a flattening of yield curves, suggesting that investors expect a slowdown in global economic growth, a longer-term slowdown in inflation, or both.
Read: Why investors should care about falling global bond yields and a flatter Treasury curve
“The restart of economic activity is real and expanding,” wrote Jean Bolvin, Elga Bartsch, Wei Li and Nicholas Fawcett in the press release. They said the restart of global activity was causing a surge in growth that would eventually level out into an “expansion around trend growth” followed by “an unusually large number of potential outcomes,” they said.
For now, the global restart scenario supports “our risk appetite and our underweight stance in government bonds as we believe their low yields do not reflect the dynamics of the restart,” the authors wrote. They also said they were tactically overweight European stocks, while recently downgrading emerging market stocks and bonds to neutral.
The authors were not immediately available for comment.