BlackRock says Treasurys have become a less reliable hedge against stock market sell-offs

Key Points
  • BlackRock sees negative returns on developed-market government bonds over five years because of low and negative interest rates.
  • Due to the extreme policy response to the pandemic, BlackRock said Treasury holdings may no longer act like the ballast against stock sell-offs that they traditionally have.
  • Investors, therefore, need to look for alternatives.
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BlackRock does not expect that Treasurys and other sovereign debt instruments will provide the cushion against sell-offs in stocks and other risk assets that they traditionally have.

In its second-half outlook, BlackRock Investment Institute said it expects negative returns across developed-market government bonds over five years because of low and negative yields.