--- title: "BlackRock Fund: How should investments break through under the triple impact of inflation, economy, and interest rates?" type: "News" locale: "en" url: "https://longbridge.com/en/news/280699230.md" description: "BlackRock Fund pointed out in its latest report that due to the ongoing conflicts in the Middle East, the energy market is facing long-term supply shocks, leading to an increase in inflation expectations. The fund has reduced its risk exposure and is prepared to adjust its strategy according to changes in the situation. The market's optimistic expectations for inflation have been shattered, and it is expected that the Federal Reserve will not cut interest rates, but may instead raise them. Current market pricing implies that global economic growth will be dragged down, increasing the risk of rising inflation" datetime: "2026-03-26T23:34:04.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/280699230.md) - [en](https://longbridge.com/en/news/280699230.md) - [zh-HK](https://longbridge.com/zh-HK/news/280699230.md) --- > Supported Languages: [简体中文](https://longbridge.com/zh-CN/news/280699230.md) | [繁體中文](https://longbridge.com/zh-HK/news/280699230.md) # BlackRock Fund: How should investments break through under the triple impact of inflation, economy, and interest rates? According to the Zhitong Finance APP, on March 27, BlackRock stated that the situation in the Middle East remains uncertain, energy infrastructure has been attacked, and the global shipping route through the Strait of Hormuz may face a long-term closure. This has triggered significant fluctuations in energy market pricing, with expectations that supply disruptions could last until next year. The price of crude oil futures for year-end delivery has surged, as have forward contracts. The widespread supply shock has shattered the market's optimistic expectations regarding inflation pressures. Market expectations have shifted from the Federal Reserve potentially cutting interest rates three times this year to the possibility of rate hikes. Long-term government bonds have been sold off, indicating that they are no longer a safe haven when conflicts trigger supply shocks and push up inflation. Paradoxically, the S&P 500 index is currently only 7% lower than its historical peak. BlackRock believes there is a disconnection in the current market: macro shocks combined with a shift in policy expectations towards a hawkish stance, while current stock price performance does not align with these factors. BlackRock believes that due to the ongoing conflict in the Middle East, the energy market has begun to digest expectations that long-term supply shocks will push up inflation, and therefore, BlackRock is tactically reducing risk exposure at this stage. If the situation eases, BlackRock stated it is prepared to quickly adjust its strategy. The political pressure brought about by rising energy prices may shorten the duration of the conflict, but there is currently no concrete evidence to suggest that this will happen. This means there is no reason to believe that current market expectations for energy prices are too high. It is estimated that current market pricing implies that global economic growth will be dragged down by about 0.75 percentage points, while inflation will also rise, and the situation may worsen further. Therefore, the market's optimistic expectations for moderate inflation have been shattered, and it is expected that the Federal Reserve will not cut rates, while the Eurozone and the UK will implement multiple rate hikes. Last week, central banks maintained interest rates, but their policy maneuvering space has significantly narrowed. Earlier this year, BlackRock believed that a weakening labor market could provide the Federal Reserve with a basis for rate cuts. However, this window is rapidly closing. The Federal Reserve also hinted last week that the rationale for future rate cuts has significantly weakened. BlackRock stated that this energy shock has a broader impact than typical oil price spikes. The natural gas market is in turmoil, and the effects of the near closure of the Strait of Hormuz are being transmitted to various production materials. This exacerbates the shock to economic growth, with Europe and Asia suffering heavily due to their high dependence on energy imports, leading to rising inflation pressures. This is not a reversal of the inflation situation, but rather another driving factor for the inflation outlook. Therefore, BlackRock believes that even if the conflict ends, yield levels will remain high. We are in a supercharged global landscape dominated by supply-side factors, where supply disruptions are affecting inflation and economic growth. Central banks are facing a difficult choice between maintaining economic growth and controlling inflation. Based on the above judgments, BlackRock has decided to tactically reduce risk exposure. Given that the overall pricing of risk assets has not fully reflected the implied shocks from the energy market, BlackRock currently holds a neutral view on global equities. In terms of fixed income, BlackRock maintains an underweight view on U.S. long-term government bonds. The institution believes that against a backdrop of heavy debt burdens, as investors demand higher compensation for holding long-term bonds, bond yields will rise. Furthermore, this conflict further confirms that long-term U.S. Treasuries are no longer a reliable buffer against geopolitical shocks or stock market sell-offs Therefore, BlackRock is more optimistic about short-term and medium-term U.S. Treasuries that are less sensitive to interest rates. Given the rapid repricing of market expectations for interest rate hikes, the institution has upgraded its outlook on short-term European government bonds, viewing them as a cash buffer. The institution will be ready to adjust these strategies at any time. 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