BlackRock Investment Institute stays neutral on U.S. stocks and still favors short-term Treasuries a week after its shift

As of 9:09 a.m. ET, Tuesday, Oct. 20, 2026

The BlackRock Investment Institute, BlackRock's research arm, is holding to its more cautious stance on U.S. stocks. In its Oct. 19 weekly commentary, the institute said, "We still favor AI within our neutral stance on U.S. equities," and it kept short-term U.S. Treasuries at overweight.

The institute made the change in its Oct. 12 weekly commentary, titled "Upgrading U.S. Treasuries to lock in income." It said it was upgrading Treasuries, "preferring short-term bonds, as higher yields improve potential returns," and "downgrading U.S. equities to neutral to manage potential volatility around the AI buildout."

What BlackRock changed, and why

According to the Oct. 12 commentary, the institute upgraded shorter-term Treasuries to overweight, "where we see scope for excessive Fed tightening expectations to unwind," and long-term Treasuries to neutral "as higher yields now provide better compensation for interest-rate risk."

The institute said its Treasury underweight had been "a mainstay for most of the last six years." It said that since January, markets had priced in 160 additional basis points of Fed tightening over the next 12 months, adding, "We think that is overdone." At current yields, it said, its analysis suggests "a 75-basis-point cushion against further yield increases over 12 months before total returns turn negative."

The institute said it funded the Treasury upgrades partly from U.S. agency mortgage-backed securities, where it is now neutral, and by "closing our long-held U.S. equity overweight to neutral." It called the stock downgrade "a short-term risk-management move." "We are managing near-term risk, not changing our core convictions," the commentary said. "We remain constructive on AI and stand ready to add risk again as visibility improves and attractive entry points emerge." It also kept its overweight in emerging market stocks.

CNBC reported the shift on Oct. 13, describing it as BlackRock adjusting its view on U.S. Treasurys "for the first time in around six years." GROKsiNEWS.com reported on Oct. 14 on the 10-year Treasury yield closing at its highest level since 2002.

What has happened since

The Oct. 19 commentary kept those positions in place. Its asset class table says of U.S. stocks: "We are neutral. Strong AI fundamentals remain supportive, but policy uncertainty could fuel near-term volatility. We continue to favor AI and tech." On short-term Treasuries, it says, "Much of the repricing we anticipated has occurred, and expectations for further Fed hikes look excessive." The same table still lists long-term U.S. Treasuries and U.S. agency MBS at neutral.

The institute wrote that last week "the S&P fell 2% while the Nasdaq slumped nearly 5%" amid concerns over AI-driven capital spending. It said higher bond yields "are creating new investment opportunities, as reflected in our move to upgrade U.S. Treasuries last week," while urging selectivity after a sell-off in French government bonds.

How other major firms see it

Morgan Stanley. In an Oct. 14 article by Wealth Management Chief Investment Officer Lisa Shalett, Morgan Stanley's Global Investment Committee said, "We believe the bond selloff has gone too far," and that it sees the 10-year Treasury yield "gradually declining toward 4.7% over the next 12 to 15 months." It said, "We are also constructive on stocks," favoring "high-quality, large-cap growth companies," with S&P 500 targets of 8,000 by year-end and 8,300 by next June. Morgan Stanley says the article is based on Shalett's Oct. 7 presentation, before BlackRock's Oct. 12 change.

UBS. UBS's Chief Investment Office said on Oct. 16, "We continue to rate fixed income as Attractive," and that current market pricing of Fed tightening "remains too hawkish." It said it now expects the Fed to raise rates by another 50 basis points over the next 12 months. It said more income-focused investors "may turn to short-maturity bonds" and that it remains "cautious on the longest maturities."

Vanguard. Vanguard's Oct. 14 U.S. economic outlook said the September CPI reading "doesn't materially change our inflation outlook." The firm said, "We continue to view one additional hike this year as most likely," though "the risk has risen for hikes at each of the Fed's two remaining meetings this year."

Goldman Sachs Asset Management. Goldman Sachs Asset Management's October Market Pulse, with data as of Oct. 5, said, "We think the income environment remains attractive." It said higher-for-longer interest rates "are largely priced into equity markets, but rapid rate moves may still cause some chop." The publication's asset class forecast table, whose price targets it says are provided by Goldman Sachs Global Investment Research, shows a 12-month S&P 500 target of 8,700 and a 10-year Treasury yield of 4.4%. That publication predates BlackRock's Oct. 12 change.

BlackRock says its views represent "an assessment of the market environment at a specific time" and are not intended as a forecast or a guarantee of future results.