BlackRock Says Get Used to Higher Long-Term Rates
Gargi Pal Chaudhuri said "investors should get used to higher long-term interest rates" in early September 2026. Yahoo Finance Long-term rates help set mortgages and long business loans.
Chaudhuri is head of iShares investment strategy at BlackRock. MarketWatch Her comment came with BlackRock's Fall 2026 Investment Directions for advisors, which the firm framed around AI volatility, midterms, rates and diversified portfolios as competition for capital intensifies.
That edition noted three-month average job growth had slowed to +20,000. Chaudhuri separately described the second half of 2026 as featuring "a resilient U.S. economy, strong corporate fundamentals and AI reshaping opportunities." LinkedIn Output held up while hiring cooled.
BlackRock's August Institutional Outlook added that "the AI investment cycle remains strong." LinkedIn That kept focus on capex, or spending on equipment and buildings, hyperscaler balance sheets and IG tech supply, even as rate volatility complicated duration timing. Duration is sensitivity to rate moves.
The message has evolved. In December 2023, BlackRock argued through MarketWatch that stocks and bonds paid off more when the Fed was on pause than in easing periods. MarketWatch At that point Chaudhuri said the Fed was likely at the end of its hiking cycle but she did not anticipate rate cuts until the second half of 2024.
By April 2024, with rising bond yields failing to stop tech outperformance, Chaudhuri suggested investors consider ETFs such as the iShares 1-5 Year Investment Grade Corporate Bond fund. MarketWatch Yield is annual income as a share of price. The preference was front-end IG carry, or income from shorter-term company bonds, over long duration. In July 2024, she said she expected the Federal Reserve to cut interest rates twice in 2024.
That easing call carried into 2025. BlackRock's Fall 2025 Investment Directions said that despite resuming the easing cycle in September, the Federal Reserve would likely keep interest rates above neutral for longer. BlackRock Fall 2025 Neutral is the thermostat setting that neither speeds nor slows growth. BlackRock separately cited the Federal Reserve forecast implying a target of 3.6% by the end of 2025 and 3.4% by the end of 2026. BlackRock
The broader context here is a shift from timing cuts to pricing persistence. Pause outperformance, then front-end carry, then a shallow easing path above neutral, then acceptance of structurally higher term compensation. Each stage pushed reinvestment risk, the risk of reinvesting at lower rates, and extension risk, the risk of being tied up longer, in opposite directions.
In my view, that sequence explains the current emphasis on diversification rather than a single rates bet. Slow payroll expansion with resilient activity and firm AI capex argues for split exposure across short and long rates, selectivity in duration, and attention to corporate cash flows funding investment. Above-neutral policy for longer keeps front-end yields relevant for savers while long-end supply and term premium keep bond volatility elevated into the midterms.
