BlackRock Investment Institute said in its weekly commentary that it expects the Federal Reserve to raise interest rates once more before the end of the year. The asset manager argued that current market pricing for additional tightening looks overly hawkish.
Positioning and view
BlackRock said it is overweight short-dated US Treasuries and neutral on long-dated Treasuries. It is also neutral on US equities, with a preference within that stance for artificial intelligence and technology names. The firm does not believe recent tightening marks the start of a new, sustained hiking cycle.
The Fed’s policy decision this week falls at its second-to-last meeting of 2026. A hotter-than-expected September CPI report had shown price pressures broadening, a factor BlackRock weighed in reaching its call. Markets have since partly scaled back expectations for further hikes, moving closer to the firm’s own view, though a shift toward BlackRock’s reading is not yet complete.
Risks to the view
Separately, Fitch and S&P both pointed to heavy supply in the Treasury market this week, a signal that bond issuance remains a live concern for investors even as the rate debate continues.
BlackRock also warned that long-term yields may climb further as governments and companies, including those funding AI infrastructure, keep borrowing heavily. That dynamic, the firm suggested, could put upward pressure on yields independent of whatever the Fed itself decides to do next.
The federal funds rate stood at 3.88 percent as of 28 October 2026, having held at that level since 23 October 2026.
Source: BlackRock Investment Institute | Data: FRED — St. Louis Fed
