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Hi, I’m Kristy Akullian, head of iShares Investment Strategy.

There are three big takeaways from our Spring Investment Directions outlook.

First, the U.S. economy remains resilient, even as inflation pressures keep the Fed on hold. Growth is forecasted to remain around 2% this year, supported by consumption and continued investment. While energy prices pose some upside risk to inflation, core inflation continues to move gradually towards target, leaving the Fed patient in the near term, with room to cut if labor markets soften.

Second, we are seeing a tension in markets between strong earnings and rising macro risks. Continued investment—particularly in AI and technology—has been supporting equities, even as uncertainty around inflation, policy, and geopolitics weighs on sentiment. This is creating opportunities to allocate to durable trends like AI in the U.S. and emerging markets, as well as infrastructure and energy security.

Third, portfolios may require a broader, more diversified basket of diversifiers in this environment. Traditional diversifiers have at times sold off alongside equities this year, while alternative strategies like liquid alternatives have remained more uncorrelated and helped manage volatility.

Our overall message is that risks are elevated, but not systemic. For clients, that means staying invested, focusing on the parts of the market where earnings and income remain durable, and building portfolios that can navigate volatility.

To read the full article, head over to the Inside the Markets pages on BlackRock.com or iShares.com.

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