BlackRock Upgrades Short-Term Treasuries to Overweight, Cuts U.S. Stocks to Neutral

The BlackRock Investment Institute, the research arm of BlackRock, cut its view on U.S. stocks to neutral from overweight and moved short-dated U.S. Treasuries to overweight, according to a weekly note dated Oct. 12 and reported on Oct. 13, 2026. The institute said it closed a "long-held" U.S. equity overweight "to manage potential volatility around the AI buildout."

The Treasury shift reverses a long-standing call. BlackRock moved long-term Treasuries to neutral from underweight, unwinding a position held for most of the last six years. It first went underweight in October 2020, when the 10-year yield was below 0.9%. The institute also trimmed its underweight in Japanese government bonds and moved U.S. agency mortgage-backed securities to neutral. The six-year figure refers to the Treasury underweight, not to the equity overweight.

BlackRock's reasoning centers on yields and Fed expectations. It said the 10-year Treasury yield has risen 110 basis points this year to about 5.25%, and that the 160 basis points of additional Fed tightening priced in over the next 12 months looks overdone, which is why it favors the short end. The institute estimates a 75 basis point cushion against further yield increases over 12 months before Treasury total returns turn negative. Its note is titled "Upgrading U.S. Treasuries to lock in income."

The equity move is framed as short-term risk management rather than a change of conviction. BlackRock said its AI convictions remain intact, it still favors AI-related companies and listed infrastructure, and it stands ready to add risk as visibility improves. It cited FactSet data showing S&P 500 third-quarter earnings expected to grow nearly 30% from a year earlier.

Investors could watch whether yields push past the 75 basis point cushion, whether the Fed path priced in by markets moderates, and whether the institute restores its equity overweight if the AI-related volatility it flagged fades.