BlackRock Institute: Why do we still prefer risk under the "shutdown" of the U.S. government?

According to the Zhitong Finance APP, on October 10th, BlackRock's think tank stated that due to concerns about a weak labor market, the Federal Reserve officially cut interest rates last month. As described in the institution's fourth-quarter global outlook, this rate cut supports its risk-preferred stance. The BlackRock think tank mentioned that the overweight view on the U.S. depends on two factors: first, the resilience of U.S. economic activity, and second, the cooling of the U.S. labor market prompting further rate cuts by the Federal Reserve. The BlackRock think tank stated that it maintains a neutral view on U.S. Treasuries, and with the Federal Reserve restarting the rate cut cycle, it has ended its long-standing underweight view on long-term U.S. Treasuries. For the Federal Reserve, weak job growth and cooling labor demand have led to a slowdown in inflation, alleviating its conflict between the dual mandates of inflation and employment, and providing a basis for the September rate cut, allowing it to signal further rate cuts. Questions regarding the independence of the Federal Reserve and fiscal dominance have temporarily subsided. However, the government "shutdown" that began on October 1st coincided with a time when employment data became increasingly critical for Federal Reserve decision-making, preventing the Federal Reserve from obtaining important monthly employment data. During the data gap, policymakers and investors closely monitored other alternative indicators, including the job openings report (JOLTs) released before the "shutdown," the private sector ADP employment report, and weekly unemployment claims data reported by various states, to observe market prospects. The BlackRock think tank believes that until federal official data resumes publication, they will continue to use these alternative indicators. The government "shutdown" and data gap have not prevented the market from pricing in expectations for two more rate cuts this year, each by 25 basis points. The BlackRock think tank agrees with this view, provided that the U.S. labor market continues to slow. Looking beyond this year, the institution believes there could be various developments in economic activity and the labor market. In the BlackRock think tank's baseline scenario, the resilience of household income will drive a recovery in consumer spending. Additionally, large-scale investments in technology equipment, software, and data centers brought about by AI development will drive economic growth. The institution believes that this scenario is insufficient to support the current market expectation of cumulative rate cuts exceeding 100 basis points by the end of 2026. Such a significant policy easing typically requires more severe weakness in the labor market and a substantial decline in inflation. Given the recent rebound in consumer demand, the likelihood of a sharp deterioration in U.S. economic growth has decreased. The BlackRock think tank mentioned, aside from this baseline scenario, are there other possibilities? As tariff uncertainties peak and begin to decline, corporate hiring may rebound, coupled with strong GDP growth, which could once again put the Federal Reserve in a dilemma between inflation and employment, reigniting questions about its policy independence. This possibility underscores the critical importance of reliable labor market data. The rate cut implemented in September, the expectation of continuing to cut rates by 25 basis points within the year, and ongoing AI capital investment all support the institution's long-standing tactical overweight view on U.S. stocks and AI themes. At the same time, the BlackRock think tank believes that now is a good time to lock in higher yields, especially real yields, as the current real yield on 10-year U.S. Treasuries remains significantly above pre-pandemic levels