US Assets Still Vital In Global Portfolios Despite Debt Downgrade: BlackRock

BlackRock Inc. BLK, the world's largest asset manager, reaffirmed its view that U.S. assets remain central to global portfolios, even as Moody's recent U.S. credit downgrade and April’s synchronized drops in stocks, Treasuries and the dollar raised investor concerns about their long-term appeal.

In a note shared Monday, Jean Boivin, head of the BlackRock Investment Institute, said the downgrade merely “reinforces the U.S. fiscal sustainability challenge” but does not alter the firm's core allocation strategy.

"We still see U.S. assets as core to portfolios," Boivin said, citing structural forces that keep the U.S. market at the heart of global capital allocation.

Why Does BlackRock Still Back U.S. Assets?

The key reasons BlackRock continues to favor U.S. assets lie in the composition of the global capital system and the enduring dominance of U.S. companies, especially in the technology and artificial intelligence sectors.

Despite a policy-driven selloff that had dragged equities, Treasuries and the dollar down together, the S&P 500 index – as tracked by the SPDR S&P 500 ETF Trust SPY – rebounded 28% since its April lows.

BlackRock remains overweight on U.S. stocks on a 6- to 12-month tactical horizon.

Boivin rationalized his bullish view by citing "U.S. corporate strength and mega forces—big structural shifts like AI that are driving an economic transformation on a par with the Industrial Revolution."

BlackRock Expects Higher Term Premium

BlackRock acknowledged growing investor concerns stemming from sticky inflation and widening fiscal deficits.

The firm said long-term U.S. Treasuries continue to offer a relatively low term premium—the extra yield investors demand for holding longer-term debt—despite mounting risks.

They said this premium needs to rise. "We have long argued that investors would want more term premium… given persistently large fiscal deficits, sticky inflation and bond volatility," the note said.

Boivin also emphasized that past instances of dollar weakness, term premium rises and policy uncertainty did not historically cause structural exits from U.S. assets, and today's dynamics remain similar.

BlackRock’s Strategy At Time of Elevated Macro Uncertainties

BlackRock is overweight inflation-linked bonds. The asset manager expects persistent inflation and sees opportunities in private markets, especially for infrastructure assets like airports and data centers.

The firm now builds portfolios around a flexible strategy, starting with the view that U.S. assets remain essential.

Despite rising debt risks and market volatility, BlackRock says the global system still depends on U.S. markets — and so should investors.

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