BlackRock cautious on long-term US Treasuries ahead of elections
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The BlackRock Investment Institute is cautious on long-term U.S. Treasuries ahead of the November presidential elections. The institute expects investors to demand more compensation to hold them due to wide fiscal deficits. It maintains an 'overweight' recommendation for short-term U.S. Treasuries in a high interest rate environment and remains neutral on longer-dated U.S. government bonds. The institute believes that regardless of who wins the election, budget deficits will remain large, leading to high inflation and elevated interest rates. The Treasury will sell nearly $120 billion in bonds this week, and demand for the auction is closely scrutinized due to concerns about U.S. debt sustainability. Some investors are allocating funds to avoid losses if Treasury yields surge due to supply and demand imbalances. Jimmy Chang, chief investment officer at Rockefeller Global Family Office, expects the return of bond vigilantes, but the timing is uncertain.

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