BlackRock Institute said that the high and persistent government bond yields will become the norm.

BlackRock Institute said that as the conflict in Iran continues to cause high inflation, government bond yields will remain at elevated levels for a longer period of time. Strategists such as Jean Boivin and Wei Li pointed out in a report that inflation pressures had been gradually rising even before the latest round of Middle East conflict erupted. The conflict-induced oil price shocks will only add to these risks, putting greater pressure on central banks around the world to maintain tightening monetary policies to curb rising prices. Given that inflation will erode the real returns of fixed-income assets and weaken their attractiveness as a safe haven, this is bad news for sovereign bonds. Therefore, BlackRock is maintaining its overweight position in US stocks and emerging market stocks and betting that the rapid development of AI will drive investment returns. They wrote: "We believe that high yields will become the norm, and long-term government bonds are no longer an effective diversification tool to hedge against stock market declines."