MARKET INSIGHTS

Weekly market commentary

June 09, 2025 | Blackrock Investment Institute
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Finding opportunities in uncertainty

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Market take

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Wei Li
Global Chief Investment Strategist at BlackRock

Opening frame: What’s driving markets? Market take

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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!

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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

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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