The Tell: Blackrock’s research arm sees `real and broadening’ restart of global economy

Sebastien Bozon/AFP/Getty ImagesA “real and broadening” restart of the global economy is underway — with the U.S. “passing the baton” to Europe and other developed markets, even as COVID-19’s delta variant presents a challenge for emerging countries, according to the research arm of BlackRock Inc., the world’s largest money manager.BlackRockBLK, which had around $9.5 trillion in assets under management in the second quarter, is widely followed because of its dominant role in financial markets. The views were released in weekly commentary Monday by the BlackRock Investment Institute.The firm’s commentary comes as a report showing record U.S. jobs openingsfor June helped to lift Treasury yields and sent the 10-year rate BX:TMUBMUSD10Y above 1.30%. Until recently, U.S. and global bond rates have generally been on a steady, downward trend — accompanied by flattening yield curves that suggested investors expect global economic growth to slow, inflation to moderate over the longer term, or both. Read: Why investors should care about falling global bond yields and a flattening Treasurys curve“The restart of economic activity is real and broadening,” Jean Bolvin, Elga Bartsch, Wei Li, and Nicholas Fawcett wrote in the note. They said the restart of global activity is causing a spurt in growth, which will eventually settle into “an expansion around trend growth” and be followed by “an unusually wide range of potential outcomes,” they said.For now, the global-restart scenario “supports our pro-risk stance and our underweight in government bonds as we believe their low yields don’t reflect the restart’s momentum,” the authors wrote. They also said they’ve been tactically overweight in European equities, while recently downgrading emerging-market equities and debt to neutral. The authors couldn’t immediately be reached for comment.

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