MARKET INSIGHTS

Weekly market commentary

Jun 09, 2025

Finding opportunities in uncertainty

Market take

Podcast script_20250602
Wei Li
Global Chief Investment Strategist at BlackRock

Opening frame: What’s driving markets? Market take

Camera frame
What’s driving markets? Welcome to Market take. Each week, we’ll bring you our insights on the latest market and economic trends that are impacting investments. I’m your host, Wei Li, Global Chief Investment Strategist at BlackRock.

We just wrapped our internal semi-annual investment forum. It’s one of my favorite times of the year where the top 100 investors from across the platform, the globe and multiple strategy teams gather to debate the next six months.

Title slide: Finding opportunities in uncertainty
I will share my early impressions — three of them — before the release of our Midyear Outlook, early July.

1: Focusing on opportunity amid uncertainty

This is counterintuitive, because typically, when there’s a huge amount of uncertainty, investors do not want to take as much risk — but that’s a behavioral bias.

So, I was very happy to see a very deliberate effort to lean against that behavioral bias — to want to identify opportunities created by uncertainty, created by market dislocation.

2: An unstable macro backdrop

It used to be macro and policy making were sources of stability — and now they are sources of volatility and uncertainty, against the backdrop of persistent inflationary pressure, against the backdrop of rising debt.

So, there is greater recognition that macro is not as supportive as before.

3. The 'what' and the 'how' of risk taking

So, the 'what' — we have talked about a lot in all our regular updates.

But 'how' is very interesting. We want to have a more deliberate risk-taking framework in this environment where macro is no longer as reliable a friend as it used to be.

So, if not the macro environment, where else do we deploy our risk budget? Is it more relative value? Idiosyncratic risk taking? Is it more mega forces?

Outro: Here’s our Market take
Here’s our Market take…

What we like at the moment: U.S. equities still a bright spot, and we still think that U.S. [Treasury yields] could rise higher.

More to come in our Midyear Outlook.

Closing frame: Read details: blackrock.com/weekly-commentary

For details, read our weekly market commentary.
Go to www.blackrock.com/weekly-commentary.

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Eyes on opportunities

At our internal Midyear Forum, our portfolio managers were laser focused on how and where to capture opportunities, even as uncertainty abounds.

Market backdrop

U.S. stocks rose last week on news of fresh U.S.-China trade talks and a solid U.S. jobs report – but it’s too soon to tell if tariffs are hurting the labor market.

Week ahead

We're looking at U.S. CPI to see if tariffs are starting to push inflation up and see persistent inflation pressure limiting how far the Fed can cut rates this year.

BlackRock’s senior portfolio managers came together at our Midyear Forum last week. What was striking was the sharp focus on opportunities even as uncertainty abounds and as policymaking disrupts, rather than stabilizes, markets. They saw a plethora and shared techniques for spotting them. Their takeaways: look through near-term noise; be deliberate about the kinds of risk you’re taking; leverage AI; and watch for biases. More to come in our Midyear Outlook, out on July 1!

Download full commentary (PDF)

Market commentary Asset class views
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Extra sensitive
Sensitivity of U.S. 10-year Treasury yields to economic uncertainty, 2003-2025

The chart shows how 10-year U.S. Treasury yields are more sensitive to data indicating economic uncertainty, with sensitivity much higher from 2020 to 2025 than from 2003 to 2019.

Past performance is no guarantee of future results. Source: BlackRock Investment Institute, with data from LSEG Datastream, June 2025. Notes: The red line shows the regression coefficient (a numerical measure of the linear relationship) between the U.S. 10-year Treasury yield and economic surprises and trade uncertainty, namely that of Treasury yields to the Citi Economics Surprise Index and the Trade Policy Uncertainty index. The line is only an estimate of this relationship. Green lines are averages over 2003-19 and 2020-25. The actual relationship may differ.

A key takeaway from our end-2024 Forum was that policymaking would become a source of disruption rather than stability. That has played out this year. In the U.S., inflation is stickier and public debt and fiscal deficits have swelled since the pandemic. With rates structurally higher now, governments and central banks face sharper trade-offs between aiding growth and curbing inflation. This reduced room to maneuver – and the global economic impact of mega forces like geopolitical fragmentation and AI – makes the macro outlook less predictable. As a result, long-term assets like 10-year U.S. Treasuries are more sensitive to incoming data, a stark departure from the pre-pandemic era. See the chart. Today, policy interventions are more likely to amplify than dampen market volatility. Yet at our Midyear Forum, our managers focused on the many opportunities, not the uncertainty.

One way our portfolio managers are finding opportunities in this environment? Looking through the near-term noise and focusing on the big picture. For all the ups and downs in markets since the start of the year, they agreed that the drivers of the best-performing companies’ equity gains have not actually changed much. They exchanged views on specific opportunities they see weathering or benefiting from the volatility. That included a shared conviction in the AI mega force driving further returns, pointing to Nvidia’s recent earnings beat despite tariff-related drags on earnings – but noted medium-term regulatory risk and the potential for slower deployment. They also like energy, again pointing to the AI mega force as one key driver of rising global energy demand that calls for more production of all kinds of energy. They noted how governments’ prioritization of homegrown, reliable power has opened up opportunities in select regions and industries.

Taking risk differently

Another key to finding opportunities? Taking risk differently. Our portfolio managers are refining their frameworks for taking risk, identifying multiple distinct types like macro, mega forces and relative value. One example: they are increasingly looking for pockets of relative value – such as that created by the dispersion we’re seeing in the government bond market. They are finding it across different bond maturities, especially as long-term bond yields are marching steadily upwards across developed markets. They are also finding it across countries as central banks take different approaches to managing the tougher trade-off between growth and inflation. Euro area bonds, for instance, are increasingly less correlated to swings in U.S. Treasuries and stand to benefit from recent rate cuts to support growth in the region.

Our portfolio managers discussed several other techniques for spotting opportunities. They are leveraging AI to discern the signal from the noise, as well as tracking patterns and sentiment shifts in their own discussions. They also discussed the importance of being aware of and managing behavioral biases, recognizing that people are less likely to take risk when uncertainty is higher. Look out for our Midyear Outlook – coming on July 1 – which will discuss these themes in more depth.

Our bottom line

Our portfolio managers are laser focused on opportunities even as policymaking adds to volatility. They’re finding opportunities by looking through near-term noise and taking risk differently. Watch for more in our Midyear Outlook.

Market backdrop

The S&P 500 rose 1.5% last week after news emerged about fresh U.S.-China trade talks and the U.S. May jobs report showed solid job growth. Policy uncertainty is likely slowing company decision-making, so any tariff impact on the labor market may only come later. A mid-week dip in 10-year U.S. Treasury yields was short-lived: they ended the week up slightly at 4.5% and 60 basis points above April lows. Europe’s Stoxx 600 rose 1%.

We're monitoring the U.S. CPI report for signs that tariffs are starting to feed through into consumer prices. Inflation has cooled in recent data, but we don't see this as a good guide to the future: we see tariff pressures building in coming months and expect a tight labor market to push up on services inflation. That will likely limit how far the Fed cuts policy rates.

Week ahead

The chart shows that gold is the best performing asset year to date among a selected group of assets, while Brent crude is the worst.

Past performance is not a reliable indicator of current or future results. Indexes are unmanaged and do not account for fees. It is not possible to invest directly in an index. Sources: BlackRock Investment Institute, with data from LSEG Datastream as of June 5, 2025. Notes: The two ends of the bars show the lowest and highest returns at any point year to date, and the dots represent current year-to-date returns. Emerging market (EM), high yield and global corporate investment grade (IG) returns are denominated in U.S. dollars, and the rest in local currencies. Indexes or prices used are: spot Brent crude, ICE U.S. Dollar Index (DXY), spot gold, MSCI Emerging Markets Index, MSCI Europe Index, LSEG Datastream 10-year benchmark government bond index (U.S., Germany and Italy), Bank of America Merrill Lynch Global High Yield Index, J.P. Morgan EMBI Index, Bank of America Merrill Lynch Global Broad Corporate Index and MSCI USA Index.

June 9

China CPI

June 11

U.S. CPI

June 13

University of Michigan May sentiment survey

Read our past weekly market commentaries here.

Big calls

Our highest conviction views on six- to 12-month (tactical) and over five-year (strategic) horizons, June 2025

  Reasons
Tactical  
U.S. equities Policy uncertainty and supply disruptions are weighing on near-term growth, raising the risk of a contraction. Yet we think U.S. equities will regain global leadership as the AI theme keeps providing near-term earnings support and could drive productivity in the long term.
Japanese equities We are overweight. Ongoing shareholder-friendly corporate reforms remain a positive. We prefer unhedged exposures given the yen’s potential strength during bouts of market stress.
Selective in fixed income Persistent deficits and sticky inflation in the U.S. make us underweight long-term U.S. Treasuries. We also prefer European credit – both investment grade and high yield – over the U.S. on more attractive spreads.
Strategic  
Infrastructure equity and private credit We see opportunities in infrastructure equity due to attractive relative valuations and mega forces. We think private credit will earn lending share as banks retreat – and at attractive returns.
Fixed income granularity We prefer short-term inflation-linked bonds over nominal developed market (DM) government bonds, as U.S. tariffs could push up inflation. Within DM government bonds, we favor UK gilts over other regions.
Equity granularity We favor emerging over developed markets yet get selective in both. Emerging markets (EM) at the cross current of mega forces – like India – offer opportunities. In DM, we like Japan as the return of inflation and corporate reforms brighten the outlook.

Note: Views are from a U.S. dollar perspective, June 2025. This material represents an assessment of the market environment at a specific time and is not intended to be a forecast of future events or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice regarding any particular funds, strategy or security.

Tactical granular views

Six- to 12-month tactical views on selected assets vs. broad global asset classes by level of conviction, June 2025

Legend Granular

We have lengthened our tactical investment horizon back to six to 12 months. The table below reflects this and, importantly, leaves aside the opportunity for alpha, or the potential to generate above-benchmark returns – especially at a time of heightened volatility. 

Asset   Tactical view Commentary
Equities      
United States   United States: tactical Overweight+1 We are overweight. Policy-driven volatility and supply-side constraints are pressuring growth, but we see AI supporting corporate earnings in the near term and driving productivity over the long run.
Europe   Europe: tactical Neutral 0 We are neutral, preferring the U.S. and Japan. We see structural growth concerns and uncertainty over the impacts of rising defense spending, fiscal loosening and de-escalation in Ukraine. Yet room for more European Central Bank rate cuts can support an earnings recovery.
U.K.   U.K.: tactical Neutral We are neutral. Political stability could improve investor sentiment. Yet an increase in the corporate tax burden could hurt profit margins near term.
Japan   Japan: tactical Neutral We are overweight given the return of inflation and shareholder-friendly corporate reforms. We prefer unhedged exposure as the yen has tended to strengthen during bouts of market stress.
Emerging markets   Emerging markets: tactical Neutral We are neutral. U.S. tariffs and trade tensions are likely to drag on growth in China and emerging markets more broadly, even with potential policy support.
China   China: neutral We are neutral. The uncertainty of trade barriers makes us more cautious, with potential policy stimulus only partly offsetting the drag. We still see structural challenges to China’s growth.
Fixed income      
Short U.S. Treasuries   Short U.S. Treasuries: tactical overweight+1 We are overweight. We view short-term Treasuries as akin to cash in our tactical views – but we would still lean against the market pricing of multiple Fed rate cuts this year.
Long U.S. Treasuries   Long U.S. Treasuries: tactical Underweight-2 We are underweight. Persistent budget deficits and geopolitical fragmentation could drive term premium up over the near term. We prefer intermediate maturities less vulnerable to investors demanding more term premium.
Global inflation-linked bonds   Global inflation -linked bonds : Neutral We are neutral. We see higher medium-term inflation, but cooling inflation and growth may matter more near term.
Euro area government bonds   Euro area govt bonds: -1 without the dot We are underweight. Growth and inflation risks are balanced. Trade uncertainty may hurt growth more than it boosts inflation, allowing the ECB to cut rates more. Greater defense and infrastructure spending will support growth in the medium term but might boost term premia.
UK Gilts   UK gilts: neutral from OW +1 We are neutral. Gilt yields are off their highs, but the risk of higher U.S. yields having a knock-on impact and reducing the UK’s fiscal space has risen. We are monitoring the UK fiscal situation.
Japan government bonds   Japanese govt bonds: -1 without the dot We are underweight. Yields have surged, yet stock returns still look more attractive to us.
China government bonds   China government bonds: tactical Neutral We are neutral. Bonds are supported by looser policy. Yet we find yields more attractive in short-term DM paper.
U.S. agency MBS   U.S. agency MBS: tactical neutral 01 We are neutral. We see agency MBS as a high-quality exposure in a diversified bond allocation and prefer it to IG.
Short-term IG credit   Short-term IG credit: tactical Overweight +1 We are overweight. Short-term bonds better compensate for interest rate risk.
Long-term IG credit   Long-term IG credit: tactical Underweight -1 We are underweight. Spreads are tight, so we prefer taking risk in equities from a whole portfolio perspective. We prefer Europe over the U.S.
Global high yield   Global high yield: tactical Neutral We are neutral. Spreads are tight, but the total income makes it more attractive than IG. We prefer Europe.
Asia credit   Asia credit: tactical Neutral We are neutral. We don’t find valuations compelling enough to turn more positive.
Emerging market - hard currency   Emerging market-hard currency: tactical Neutral 00 We are neutral. The asset class has performed well due to its quality, attractive yields and EM central bank rate cuts. We think those rate cuts may soon be paused.
Emerging market - local currency   Emerging local currency: UW -1 from neutral We are underweight. We see emerging market currencies as especially sensitive to trade uncertainty and global risk sentiment.

Past performance is not a reliable indicator of current or future results. It is not possible to invest directly in an index. Note: Views are from a U.S. dollar perspective. This material represents an assessment of the market environment at a specific time and is not intended to be a forecast or guarantee of future results. This information should not be relied upon as investment advice regarding any particular fund, strategy or security.

Euro-denominated tactical granular views

Six to 12-month tactical views on selected assets vs. broad global asset classes by level of conviction, June 2025

Legend Granular

Asset Tactical view Commentary
Equities    
 Europe ex UK Europe ex-UK: tactical neutral We are neutral, preferring the U.S. and Japan. We see structural growth concerns and uncertainty over the impacts of rising defense spending, fiscal loosening and de-escalation in Ukraine. Yet room for more European Central Bank rate cuts can support an earnings recovery.
Germany Germany: neutral without the dot We are neutral. Valuations and earnings growth are supportive relative to peers, especially as ECB rate cuts ease financing conditions. Prolonged uncertainty about potential tariffs and fading euphoria over China’s stimulus could dent sentiment.
France France: neutral without the dot We are neutral. Ongoing political uncertainty could weigh on business conditions for French companies. Yet only a small share of the revenues and operations of major French firms is tied to domestic activity.
Italy Italy: neutral without the dot We are neutral. Valuations are supportive relative to peers. Yet past growth and earnings outperformance largely stemmed from significant fiscal stimulus in 2022-2023, which is unlikely to be sustained in the coming years.
Spain Spain: +1 without the dot We are overweight. Valuations and earnings growth are supportive compared to other euro area stocks. Financials, utilities and infrastructure stocks stand to gain from a strong economic backdrop and advancements in AI.
Netherlands Netherlands: neutral without the dot We are neutral. The Dutch stock market’s tilt to technology and semiconductors — key beneficiaries of rising AI demand—is offset by less favorable valuations and a weaker earnings outlook compared to European peers.
Switzerland Switzerland: neutral without the dot We are neutral, consistent with our broader European view. Earnings have improved, but valuations remain elevated compared to other European markets. The index’s defensive tilt may offer less support if global risk appetite stays strong.
UK UK: tactical neutral We are neutral. Political stability could improve investor sentiment. Yet an increase in the corporate tax burden could hurt profit margins near term.
Fixed income    
Euro area government bonds Euro area government bonds: -1 without th dot We are underweight. Growth and inflation risks are balanced. Trade uncertainty may hurt growth more than it boosts inflation, allowing the ECB to cut rates more. Greater defense and infrastructure spending will support growth in the medium term but might boost term premia. Issuance is likely concentrated in core countries that have more fiscal leeway and is likely in line with increasing issuance from the European Commission.
German bunds German bunds: -1 without the dot We are underweight. Market pricing aligns with our policy rate expectations, but growth support fiscal stimulus is likely to push up neutral rates. More balanced inflation risks and bond issuance could push term premium up.
French OATs French OATs: -1 without the dot We are underweight. France continues to face challenges from elevated political uncertainty, persistent budget deficits and a slower pace of structural reforms. 
Italian BTPs Italian BTPs: tactical Neutral We are neutral. The spread over German bunds looks tight given its large budget deficits and growing public debt. Domestic factors remain supportive, with growth holding up relative to the rest of the euro area and Italian households showing solid demand to hold BTPs at higher yields. Given the domestic political pushback, we do not think Italy will boost defense spending to such an extent that fiscal stability concerns resurface.
UK gilts UK gilts: tactical neutral We are neutral. Gilt yields are off their highs, but the risk of higher U.S. yields having a knock-on impact and reducing the UK’s fiscal space has risen. We are monitoring the UK fiscal situation.
Swiss government bonds Swiss government bonds: tactical neutral We are neutral. Markets are expecting policy rates to return to negative territory, which we deem as unlikely.
European inflation-linked bonds Euro area inflation-lined bonds: tactical neutral We are neutral. We see higher medium-term inflation, but inflation expectations are firmly anchored. Cooling inflation and uncertain growth may matter more near term.
European investment grade credit European investment grade credit: tactical Neutral We are neutral on European investment grade credit, favoring short- to medium-term paper for quality income. We prefer European investment grade over the US, as spreads are relatively wider.
European high yield European high yield: tactical Overweight +1 We are overweight. The income potential is attractive, and we prefer European high yield for its more appealing valuations, higher quality and less sensitivity to interest rate swings compared with the U.S. Spreads adequately compensate for the risk of a potential rise in defaults, in our view.

Past performance is not a reliable indicator of current or future results. It is not possible to invest directly in an index. Note: Views are from a euro perspective, June 2025. This material represents an assessment of the market environment at a specific time and is not intended to be a forecast or guarantee of future results. This information should not be relied upon as investment advice regarding any particular fund, strategy or security.

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Meet the authors
Jean Boivin
Jean Boivin
Head – BlackRock Investment Institute
Wei Li
Wei Li
Global Chief Investment Strategist – BlackRock Investment Institute
Glenn Purves
Glenn Purves
Global Head of Macro – BlackRock Investment Institute
Vivek Paul
Vivek Paul
Global Head of Portfolio Research – BlackRock Investment Institute