BlackRock remain ‘pro-risk’ but see three triggers that would change their view

BlackRock’s latest says that to start 2025, their outlook remains pro-risk, with a focus on U.S. stocks. However, the view may shift based on three key factors:

1. Policy Changes: Monitoring U.S. tariffs and fiscal policy for potential impacts on the market.
2. Corporate Earnings and Valuations: Evaluating whether investor appetite for risk diminishes due to earnings performance or high tech valuations tied to AI expansion.
3. Financial Vulnerabilities: Keeping an eye on risks like rising bond yields, reduced expectations for rate cuts, and challenges in corporate debt refinancing due to higher interest rates.

Recent developments include:

• A strong U.S. jobs report that led to a dip in U.S. stocks and a rise in Treasury yields to near 4.80%.
• UK gilt yields increased due to fiscal concerns.

The firm’s focus for the week is, of course, on the U.S. CPI, with expectations of robust wage growth and persistent core services inflation keeping overall inflation above the Federal Reserve’s target.

This article was written by Eamonn Sheridan at www.forexlive.com.