BlackRock's CIO: Long-term US Treasury bonds are currently not attractive, US stock returns are more appealing.

Rick Rieder, Chief Investment Officer (CIO) of BlackRock's Global Fixed Income Business, believes that there are more investment opportunities in the current US stock market, while the long end of the US Treasury curve is not as attractive. Rieder states that, from a yield perspective, short-term bonds are more appealing. However, he also points out that the correlation between long-term bonds and stock market volatility has been increasing, making them less effective as risk hedging tools. In his view, in this background, the expected return of stocks makes them more attractive assets in a portfolio. He said, "Today, I lean more towards investing in stocks. The net asset return rate for stocks is 19%. So, think about it, the book value of the stocks I hold will increase by 19% - I can achieve this growth in two years, or I can purchase long-term bonds at a rate lower than 5% (at that time, the annual consumer price inflation was about 2.4%). I would choose equities, especially growth equities." Due to uncertainty surrounding President Trump's trade policies and future government spending plans, prices of both asset classes have been volatile in 2025. This year, the total return rate of the S&P 500 Index has increased by nearly 6%, driven by stocks led by growth tech stocks that have seen a strong rebound since the April low, setting a new historical high for the index. Meanwhile, the iShares 20+ Year Treasury Bond ETF (TLT) with a scale of $49 billion has a total return rate of approximately 2% year-to-date. Rieder states that with the decline in inflation rates and interest rates, long-term bonds will eventually become attractive. But for now, he is prepared for a steepening of the expected return rate curve - betting that the performance of longer-term bonds will lag behind short-term bonds. This trade has been popular this year, partly because of concerns that the continuous expansion of the US federal deficit will lead to an increase in bond issuances. Rieder says, "There will always be a time when we want to hold assets with certain durations. But I don't think this is the mainstream trend in the current market."