BlackRock-2023年二季度展望：金融裂縫和經(jīng)濟(jì)損害正在顯現(xiàn)（英）

March

20232023

Global

outlookQ2

updateFOR

PUBLIC

DISTRIBUTION

IN

THE

U.S.,

CANADA,

LATIN

AMERICA,

HONG

KONG,

SINGAPORE

AND

AUSTRALIA.FOR

INSTITUTIONAL,

PROFESSIONAL,

QUALIFIED

INVESTORS

AND

QUALIFIED

CLIENTS

IN

OTHER

PERMITTED

COUNTRIES.BIIM0323U/M-2820860-1/26The

new

regime

of

sharpertradeoffs

is

playing

outThe

tradeoffbetween

crushing

activity

orliving

with

higher

inflationina

world

shaped

bysupplyisfrontand

center.Centralbankprojectionsforhigherinflation

and

slowinggrowthsuggest

theyarewakingup

tothis

trade

offnow.U.S.

Federal

Reserve

projections

for

Q4

2023

GDP

growth

and

inflation4%3%Core

PCE

inflationGDP

growth2%1%0%Sep21Dec21Mar22Jun22Sep22Dec22Mar23Source:BlackRock

Investment

Institute,U.S.Federal

Reserve,

March

2023.

Notes:Thechart

showstheprogressionofthemedian

Federal

Open

Market

Committeeprojection

for

Q42023

U.S.real

GDPgrowthandcorePCE

inflation

year-over-year,fromSeptember

2021

toMarch

2023.FOR

PUBLIC

DISTRIBUTION

IN

THE

U.S.,

CANADA,

LATIN

AMERICA,

HONG

KONG,

SINGAPORE

AND

AUSTRALIA.FOR

INSTITUTIONAL,

PROFESSIONAL,

QUALIFIED

INVESTORS

AND

QUALIFIED

CLIENTS

IN

OTHER

PERMITTED

COUNTRIES.BIIM0323U/M-2820860-2/262Themes

and

viewsLatest

tacticalviewchangesDevelopedmarket

equities1.Pricing

the

damageFinancial

cracks

andeconomic

damages

fromthefastest

rate

hiking

cycle

since

the

1980s

areemerging.Whatmatters:

the

pricing

oftheseandour

assessment

ofmarket

risksentiment.Emergingmarket

equitiesHigh

yield

credit2.3.Rethinking

bondsWesee

higheryields,especiallyin

short-termgovernmentbonds,asagifttoinvestorsafteryears

ofbeing

starved

ofincome.Short-termgovernmentpaperEMlocal

currency

bondsLiving

with

inflationInflation-linked

bondsCentralbanksare

likely

to

stop

theirrapid

ratehikeswhentheeconomic

and

financial

damagebecomesclearer,

withinflation

likely

settling

above2%policy

targets.Long-termgovernmentbondsUnderweightNeutralOverweightTheopinionsexpressed

areasofMarch

2023

andare

subject

tochangeat

anytime

duetochangesin

market

oreconomicconditions.Strategic

implications

refer

tolong-termviews

offive

years

and

longer,tactical

implications

refer

toasset

views

onshorterhorizons

of12

months

orless.FOR

PUBLIC

DISTRIBUTION

IN

THE

U.S.,

CANADA,

LATIN

AMERICA,

HONG

KONG,

SINGAPORE

AND

AUSTRALIA.FOR

INSTITUTIONAL,

PROFESSIONAL,

QUALIFIED

INVESTORS

AND

QUALIFIED

CLIENTS

IN

OTHER

PERMITTED

COUNTRIES.BIIM0323U/M-2820860-3/263Pricing

the

damageRapid

ratehikes

drive

economic

and

financial

damageWe’vearguedthatthe

Fed’sfastest

ratehiking

campaignsince

the

1980swould

causeeconomicdamageandfinancial

cracks.

Thosefinancial

crackshaveburst

intoviewinrecentweeks.Fed

rate

hiking

cycles,

1972-202212108198062022-20231972-2016420050100WeeksSource:BlackRock

Investment

Institute,with

data

fromRefinitiv

Datastream,

March

2023.

Notes:Thechart

showspreviousandcurrentFederal

Reserverate

hikecycles.FOR

PUBLIC

DISTRIBUTION

IN

THE

U.S.,

CANADA,

LATIN

AMERICA,

HONG

KONG,

SINGAPORE

AND

AUSTRALIA.FOR

INSTITUTIONAL,

PROFESSIONAL,

QUALIFIED

INVESTORS

AND

QUALIFIED

CLIENTS

IN

OTHER

PERMITTED

COUNTRIES.BIIM0323U/M-2820860-4/264Pricing

the

damageNot

a

repeatof

2008,

yet

our

recession

view

is

reinforcedThe

effects

ofhigherinterest

ratesand

tightening

financial

conditionsarehitting

theeconomywith

several

indicatorsflashing

red.We

don’tseea

repeatof2008’s

financial

crisis,

yetthebank

tumulthasreinforcedour

recessions

view.Key

U.S.

economic

indicators,

2006-2023WeakerStrongerSource:BlackRock

Investment

Institute,with

data

fromRefinitiv

Datastream,

March

2023.

Notes:Thechart

showsaheatmap

ofkeyeconomicindicators

from

2006-2023.

Series

arescored

based

onthenumber

ofstandard

deviations

fromaverageovertheperiod.

Thesquaresturningmorered

represents

theindicator

worsening.

Theseries

usedare

thefollowing.

Mortgagerate:theconventional30-year

mortgage

rate,Mortgage

Bankers

Association;

Homebuilder

confidence:

U.S.NationalAssociation

ofHomeBuilders

HousingMarket

Index;Residential

investment

growth:

theannualchangein

U.S.residential

private

domestic

investment,U.S.Bureau

ofEconomicAnalysis;

Pending

homesales:

U.S.pending

homesales,

NationalAssociation

ofRealtors;

CEOconfidence:

U.S.ConferenceBoard

CEOConfidence

Survey.Small

business

credit

conditions:U.S.

NFIBSurvey

percentage

ofrespondentspositive

oncredit

conditions

less

negative.

Corporatelending

conditions:U.S.C&Iloansurvey–large

andmedium

firms,

tightening

credit.

Business

investment

growth:

U.S.non-residential

private

fixed

investment.U.S.personal

savings

rate.

U.S.retail

sales:

Theannual

change

insales

excluding

motor

vehicle

dealers

andgasstations,Commerce

Department.FOR

PUBLIC

DISTRIBUTION

IN

THE

U.S.,

CANADA,

LATIN

AMERICA,

HONG

KONG,

SINGAPORE

AND

AUSTRALIA.FOR

INSTITUTIONAL,

PROFESSIONAL,

QUALIFIED

INVESTORS

AND

QUALIFIED

CLIENTS

IN

OTHER

PERMITTED

COUNTRIES.BIIM0323U/M-2820860-5/265Pricing

the

damageTightening

credit

supply

to

weigh

on

activityBanklending

surveysshowcreditconditionshad

startedtotightenintheU.S.and

the

euroareasince

late2022asratesclimbed.Wethinkthelatest

episodeofbanking

stressis

poisedtoexacerbatethistightening.Corporate

bank

lending

conditions,

1980-2023Regional

bank

index

performance,

202380120110Tightening40100Stoxx

Europe

600

banksS&P500

diversified

banksS&P500

regionalbanks908070600Easing-401990199520002005U.S.201020152020Euro

areaJan23Feb23Mar23Past

performance

isnot

areliable

indicator

of

current

or

future

results.

Source:BlackRock

InvestmentInstitute,with

data

fromRefinitiv

Datastream,

Federal

Reserve

andtheEuropeanCentralBank,March

2023.

Notes:Thechartontheleft

showsthenetpercent

ofrespondentsthat

reportedcredit

tighteningorcredit

easing.

Abovethezeroline,

respondentsreportedcredit

tightening.

Below

thezero

line,

respondentsreported

credit

easing.

Thechartontheright

showstheindex

performance

ofvariouslarge

andregional

bank

indexes.

It

is

notpossible

todirectly

invest

inanindex.Indexperformances

do

not

account

for

fees.FOR

PUBLIC

DISTRIBUTION

IN

THE

U.S.,

CANADA,

LATIN

AMERICA,

HONG

KONG,

SINGAPORE

AND

AUSTRALIA.FOR

INSTITUTIONAL,

PROFESSIONAL,

QUALIFIED

INVESTORS

AND

QUALIFIED

CLIENTS

IN

OTHER

PERMITTED

COUNTRIES.BIIM0323U/M-2820860-6/266Pricing

the

damageWe

don’t

expect

central

banks

to

come

to

the

rescueBond

markets

are

pricing

inratecutsin2023,

reflecting

theold

recession

playbookwhere

centralbanks

cutratesonsigns

ofeconomicandfinancial

damages.

Yetpersistent

inflation

meanswe

expectratestostayhigher

for

longer.Market

pricing

of

the

Fed

funds

rate

and

European

Central

Bank

policy

rate,

March

2023ECBdepositrateFedfundsrate46352413Actual8thMarchCurrentActual8thMarchCurrent02Sep22Mar23Sep23Mar24Sep24Sep22Mar23Sep23Mar24Sep24.Forward

looking

estimates

may

not

come

to

pass.Source:BlackRock

InvestmentInstitute,with

data

fromRefinitiv

Datastream,

March

2023.

Notes:Thechartsshowtheforward

fed

funds

rateandtheEuropeanCentralBank

deposit

ratethroughDecember

2024

as

implied

byfuturespricesFOR

PUBLIC

DISTRIBUTION

IN

THE

U.S.,

CANADA,

LATIN

AMERICA,

HONG

KONG,

SINGAPORE

AND

AUSTRALIA.FOR

INSTITUTIONAL,

PROFESSIONAL,

QUALIFIED

INVESTORS

AND

QUALIFIED

CLIENTS

IN

OTHER

PERMITTED

COUNTRIES.BIIM0323U/M-2820860-7/267Pricing

the

damageWe

stay

underweight

developed

market(DM)

equitiesOntopofrelying

on

ratecutswe

don’tseecoming,

corporateearningsarerunningabove

trendsand

aren't

pricinginthe

damage

fromhigher

rateswe

think.Cost

pressuresamidhighinflation

arelikely

tocrimpprofitmargins.S&P

500

earnings

after

recessionGlobal

equity

forward

profit

margins,

2005-202312%2023:12-month

forward

consensus0%-10%-20%-30%-40%11%10%9%199020018%7%20076%61218245%Monthssince

startofU.S.

recession2005

2007

2009

2011

2013

2015

2017

2019

2021

2023Forward

looking

estimates

may

not

come

to

pass.Source:BlackRock

Investment

Institute,with

data

fromMSCI

andRefinitiv

Datastream,

March

2023.

Notes:Thelines

onthechart

on

theleft

showsthepath

of

S&P

500

12-monthtrailing

earningsfollowing

thestart

ofaU.S.recession

as

defined

by

theNational

Bureau

ofEconomicResearch

(NBER),thedotshowsthecurrent12-month

forward

aggregate

analyst

earnings

growthestimate..

Thechartontheright

showsMSCI

World

12-monthforwardearnings

divided

by12

monthforward

sales.FOR

PUBLIC

DISTRIBUTION

IN

THE

U.S.,

CANADA,

LATIN

AMERICA,

HONG

KONG,

SINGAPORE

AND

AUSTRALIA.FOR

INSTITUTIONAL,

PROFESSIONAL,

QUALIFIED

INVESTORS

AND

QUALIFIED

CLIENTS

IN

OTHER

PERMITTED

COUNTRIES.BIIM0323U/M-2820860-8/268Pricing

the

damageWe

downgradecreditas

we

see

conditions

tightening

furtherWecutouroverall

creditview

toneutral,trimming

investment

gradetoneutraland

highyield

tounderweight.

Weseetighter

creditandfinancial

conditionsintheaftermathofthebankingsectortroubles.U.S.

investment

grade

and

high

yield

spreads,

2003-2023U.S.

high

yield

spread

and

PMI,

1995-20231600706050403060025002000150010005005004003002001000120080040000200320072011201520192023199520002005201020152020Investment

grade

creditHigh-yield

debt

(right)HighyieldU.S.

PMI(right)Past

performance

isnot

areliable

indicator

of

current

or

future

results.

Source:BlackRock

InvestmentInstituteandBloomberg,

with

datafrom

Refinitiv

Datastream,

March

2023.

Notes:Thechart

on

theleft

showstheoption-adjusted

spreads

ofU.S.investment

grade

(IG)credit

andhigh-yield

(HY)

debt.

Theindex

proxiesusedare

theBloomberg

U.S.Credit

USDandBloomberg

U.S.

CorporateHigh

Yield

USD.It

is

notpossible

todirectly

invest

inan

index.Indexesareunmanaged

andperformance

doesnot

take

accountoffees.

Thechartontheright

showstheU.S.

Institutefor

Supply

Management

Manufacturing

Purchasing

Manager’sIndex

(PMI)andtheoption-adjusted

spread

ofU.S.high-yield

debt.

ThePMI

is

usedas

agauge

foreconomic

activity.

Theline

moving

down

towards

andbelow

50

represents

economicactivity

contracting.Theindex

used

forU.S.high-yield

debt

is

Bloomberg

U.S.CorporateHigh

Yield

USD.FOR

PUBLIC

DISTRIBUTION

IN

THE

U.S.,

CANADA,

LATIN

AMERICA,

HONG

KONG,

SINGAPORE

AND

AUSTRALIA.FOR

INSTITUTIONAL,

PROFESSIONAL,

QUALIFIED

INVESTORS

AND

QUALIFIED

CLIENTS

IN

OTHER

PERMITTED

COUNTRIES.BIIM0323U/M-2820860-9/269Pricing

the

damageWe

prefer

EM

equities

as

China’s

restart

may

boost

returnsChina'srestartis

settoprovideaboosttoemerging

market(EM)

earningsgrowth,inourviewandweexpectthismomentumtocontinue.ThiscontrastsourviewthatDM

earningsexpectationsare

toorosyinlight

ofslowinggrowth.Emerging

market

PMI

vs.

developed

markets,

2020-2023EM

vs.

DM

earnings

estimates,

Sept.

2022-March

202312087654321011010090WeakerEMactivityStronger

EMactivitySep-22Oct-22Nov-22MSCI

EMDec-22MSCI

WorldJan-2380Mar2020Mar2021Mar2022Forward

looking

estimates

may

not

come

to

pass.Sources:BlackRock

Investment

Institute,with

datafrom

Refinitiv

Datastream,

March

2023.

Notes:Thechart

on

theleft

showsthecompositeS&P

Global

Purchasing

Managers’

Index(PMI)for

emergingmarkets

relative

todeveloped

markets.

Theline

moving

towardsthe100

mark

represents

emerging

market

PMI

strengthening

relative

todeveloped

market

PMI.Thechart

ontheright

shows12-monthforward

earnings

per

share(EPS)

growthestimatesfor

emerging

market

anddeveloped

market

equities.

Theindexesusedare

MSCI

WorldandMSCI

EM

USD.Youcannotdirectly

invest

in

anindex.

Indexperformance

does

not

accountfor

fees.FOR

PUBLIC

DISTRIBUTION

IN

THE

U.S.,

CANADA,

LATIN

AMERICA,

HONG

KONG,

SINGAPORE

AND

AUSTRALIA.FOR

INSTITUTIONAL,

PROFESSIONAL,

QUALIFIED

INVESTORS

AND

QUALIFIED

CLIENTS

IN

OTHER

PERMITTED

COUNTRIES.10BIIM0323U/M-2820860-10/26Pricing

the

damageUpgradingEM

local

debtWeseelocal

currencyemerging

market(EM)

debtasmoreresilient

totightening

financialconditionsindevelopedmarkets(DMs).

Ontop

ofthatEM

centralbanks

arealsoclosertothe

peakofratesthantheirDMpeers.EM

excess

total

bond

returns

and

PMI

vs.

DM,

2014-2023Net

number

of

rate

hikes,

EM

and

DM

central

banks,

2016-202220%15%10%5%15353025201510510500%-5-10-15-5%-10%0-520062011201620212021Q12022Q1Excess

returnPMIdifference

(right)EmergingmarketsDeveloped

marketsPast

performance

isnot

areliable

indicator

of

current

or

future

results.

Source:BlackRock

InvestmentInstitute,Bank

ofInternationalSettlements

(BIS),

Bloomberg,

S&P,

JPMorgan

with

data

fromRefinitiv

Datastream,

March

2023.

Notes:Thechart

ontheleft

shows12-monthrolling

totalreturn

ofJPMorgan’s

GBI-EM

index

minusthe12-monthrolling

totalreturnoftheBloomberg

U.S.Credit

USD.

Thisis

referred

toastheexcess

return.

Italso

showsthedifference

between

theS&P

emerging

market

PMI

andU.S.PMI.Itis

not

possible

todirectly

invest

in

anindex.Indexperformance

doesnot

account

forfees.

Thechart

ontherightshowsthenetnumber

ofratehikes

fromemerging

marketand

developed

market

banks.

It

counts

whetheracentral

bankhaseitherraised

rates(+1),cutrates

(-1)orkept

ratesthesame(0).

WeuseBIS

data

toget

alist

ofemerging

market

countrieswhich

in

thischart

include:

Brazil,

Chile,

China,Colombia,Czech

Republic,

Hungary,Indonesia,Malaysia,

Mexico,Peru,Philippines,

Poland,Romania,Serbia,

SouthAfrica,

Thailand

andTurkey.FOR

PUBLIC

DISTRIBUTION

IN

THE

U.S.,

CANADA,

LATIN

AMERICA,

HONG

KONG,

SINGAPORE

AND

AUSTRALIA.FOR

INSTITUTIONAL,

PROFESSIONAL,

QUALIFIED

INVESTORS

AND

QUALIFIED

CLIENTS

IN

OTHER

PERMITTED

COUNTRIES.11BIIM0323U/M-2820860-11/26Living

with

inflationStubbornlyhigh

DM

inflation

driven

by

servicesGoodspriceshavefallen,

dragging

overall

inflation

down

but

wagegrowthhaspersisted

and

is

fueling

stickier

coreservices

inflation.That

is

keeping

overall

inflationhigh

and

driving

moreupside

surprises.U.S.

core

goods

and

services

inflation,

2000-2023Services

inflation

and

private

sector

wages,

2005-20226%12%5%4%3%2%1%0%8%4%0%-4%200020052010Goods2015Services20202005200720092011201320152017201920212023Core

services

inflationPrivatesector

wagesSources:BlackRock

Investment

Institute,with

datafrom

U.S.Bureau

of

Labor

Statistics

andU.S.Bureau

ofEconomicActivity,

March

2023.

Notes:Thechart

ontheleft

showstheannual

change

in

U.S.core

goodsandservices

consumerprice

indexes.

Thechart

on

theright

showstheannualchangeoftheU.S.personalconsumer

expenditure(PCE)

services

price

index

excluding

energy

services

andtheU.S.Employment

CostIndexmeasureofannualprivate

sectorcompensation.FOR

PUBLIC

DISTRIBUTION

IN

THE

U.S.,

CANADA,

LATIN

AMERICA,

HONG

KONG,

SINGAPORE

AND

AUSTRALIA.FOR

INSTITUTIONAL,

PROFESSIONAL,

QUALIFIED

INVESTORS

AND

QUALIFIED

CLIENTS

IN

OTHER

PERMITTED

COUNTRIES.12BIIM0323U/M-2820860-12/26Living

with

inflationA

tight

labor

market

is

keeping

services

inflation

elevatedHighcoreservices

inflationis

keeping

overall

inflationsticky.

Coreservices

inflation

isparticularly

sensitive

tothehigherwagesthatprivatesectorfirms

areoffering

astheyfacedifficulty

filling

vacancies.U.S.

vacancy

rate

and

unemployment

rateU.S.

wage

inflation

and

unemployment

rate,

2008

onwards62008-2019Since

2021Pre

GlobalFinancialCrisis

(GFC)876543212008-2020Since

April2020LatestLatest54321246810121416345678910Unemployment

rate

(%)Unemployment

rate

(%)Sources:BlackRock

Investment

Institute,,with

data

fromHaver

Analytics,

March

2023.

Thechartontheleft

showstheU.S.vacancy

rate

andunemployment

rate

–also

knownastheBeveridge

curve.Thechart

ontheright

showsU.S.wage

inflation

andunemployment

rate,oneversion

ofthePhillips

curve.FOR

PUBLIC

DISTRIBUTION

IN

THE

U.S.,

CANADA,

LATIN

AMERICA,

HONG

KONG,

SINGAPORE

AND

AUSTRALIA.FOR

INSTITUTIONAL,

PROFESSIONAL,

QUALIFIED

INVESTORS

AND

QUALIFIED

CLIENTS

IN

OTHER

PERMITTED

COUNTRIES.13BIIM0323U/M-2820860-13/26Living

with

inflationEuropealso

has

a

tight

labor

marketfueling

inflationEuropeisdealing

with

adifferentkindof

laborshortage

–thepublicsectorhasabsorbeda

large

proportion

ofworkers.Privatefirms

areraising

wagestoattractand

retainworkersand

it’spushinginflation

higher.Euro

area

change

in

share

of

employment,

2019-2022Euro

area

wages

and

services

inflation,

2005-20226Hourlylabor

cost20Core

services

inflation4-2-4-620Q42019Q32020Q22021Q12022Contact-intenseservices

Goods

producingGovernment

Other

services2009201120132015201720192021Sources:BlackRock

Investment

Institute,Eurostat,with

data

fromHaver

Analytics,

January2023.

Notes:

Thechart

ontheleft

showsthechangein

euroareaemployment

sincethefourthquarterof2019

inmillions

ofworkers,

brokendown

intochangesbydifferent

sectors.

Otherservices

refers

toall

services

excluding

contact-intense

services.The

chart

ontheright

showsthecontributionsofdifferent

componentstoeuroareacoreinflation,

measured

by

theHarmonised

IndexofConsumerPrices.

Coreinflation

contributionsarebrokenintoenergy-intensive

andnon-energyintensive

coreusinga

method

similar

to

the

ECB,distinguishing

between

corecomponentswith

above-average

orbelow-average

sharesoflabor

costsintotalcosts.FOR

PUBLIC

DISTRIBUTION

IN

THE

U.S.,

CANADA,

LATIN

AMERICA,

HONG

KONG,

SINGAPORE

AND

AUSTRALIA.FOR

INSTITUTIONAL,

PROFESSIONAL,

QUALIFIED

INVESTORS

AND

QUALIFIED

CLIENTS

IN

OTHER

PERMITTED

COUNTRIES.14BIIM0323U/M-2820860-14/26Living

with

inflationWe

favor

inflation-linked

bonds

as

higher

inflation

persistsMarketsareexpectinginflation

tofall

backnear2%.

Wethinkthemarketisunderappreciatingthepersistenceofinflation

inaworld

shaped

bysupply.

Westayoverweightinflation-linked

bonds

asa

result.U.S.

CPI

inflation

and

market

expectation,

2016-20288642020162018U.S.

CPI20202022202420262028U.S.

core

CPIMarket

expectationForward

looking

estimates

may

not

come

to

pass.Source:BlackRock

Investment

Institute,with

data

fromRefinitiv

Datastream,

March

2023.

Notes:Thechart

showsU.S.CPI

andcoreCPIinflation

andmarket

pricing

ofwhat

inflation

will

average

overthefive-year

period

that

begins

five

years

fromtoday

–also

known

asthe5-year/5-year

inflation

swap.FOR

PUBLIC

DISTRIBUTION

IN

THE

U.S.,

CANADA,

LATIN

AMERICA,

HONG

KONG,

SINGAPORE

AND

AUSTRALIA.FOR

INSTITUTIONAL,

PROFESSIONAL,

QUALIFIED

INVESTORS

AND

QUALIFIED

CLIENTS

IN

OTHER

PERMITTED

COUNTRIES.15BIIM0323U/M-2820860-15/26Rethinking

bondsWe

see

longer-term

yields

rising

as

term

premia

returnsPersistentinflation,

highdebt

burdenspost-pandemicand

tightening

liquidity

inbond

marketsascentralbanksunwind

theirbalancesheetexpansions

willspurareturnoftermpremiapushingup

longer-term

yields,

inour

view.U.S.

10-year

term

premium

breakdown,

2013-20236543210-1-2201320152017201920212023YieldTerm

premiumRisk-neutralyieldPast

performance

isnot

areliable

indicator

of

current

or

future

returns.Source:BlackRock

Investment

Institute,NYFed

with

datafrom

Refinitiv

Datastream,

March

2023.

Notes:Thechart

showsthebreakdown

oftheU.S.10-year

yield

(green

line)intotherisk-neutral

yield

(pink)andthetermpremium

(red).Termpremium

is

theadditional

compensation

investorsdemanded

for

bearing

therisk

ofholding

along-termgovernment

bondtomaturity.For

moredetail

on

thecalculation

ofthetermpremium

see

theNY

Fed

website.FOR

PUBLIC

DISTRIBUTION

IN

THE

U.S.,

CANADA,

LATIN

AMERICA,

HONG

KONG,

SINGAPORE

AND

AUSTRALIA.FOR

INSTITUTIONAL,

PROFESSIONAL,

QUALIFIED

INVESTORS

AND

QUALIFIED

CLIENTS

IN

OTHER

PERMITTED

COUNTRIES.16BIIM0323U/M-2820860-16/26Rethinking

bondsJapan

policy

shift

could

push

up

global

bond

yieldsInflation

nearfour-decadehighsamidhigher

wages

paves

the

way

forthe

BankofJapan

tomoveaway

fromits

ultra-loosemonetarypolicy.

That

couldspurJapanesebondyields

higher,potentially

lifting

otherDMlong-term

yields

too.Japanese

wages

and

core

CPI

inflation,

1995-202310-year

bond

yields,

2013-20236%5434%2%20%1-2%-4%-6%0-1-21995200020052010201520202013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023Monthly

earningsCore

CPI

inflationU.S.GermanyJapanPast

performance

isnot

areliable

indicator

of

current

or

future

results.

Source:BlackRock

InvestmentInstitute,with

data

fromHaver

Analytics

andRefinitiv

Datastream,

March

2023.

Notes:Thechart

ontheleft

showscoreCPIinflation,

excludingfood,non-alcoholicbeverages

andenergy

(Western

core).Theearningsline

is

based

onthethree-monthmoving

average.

Thechartontheright

shows10-year

governmentbondyields

for

theU.S.,

Germanyand

Japan.FOR

PUBLIC

DISTRIBUTION

IN

THE

U.S.,

CANADA,

LATIN

AMERICA,

HONG

KONG,

SINGAPORE

AND

AUSTRALIA.FOR

INSTITUTIONAL,

PROFESSIONAL,

QUALIFIED

INVESTORS

AND

QUALIFIED

CLIENTS

IN

OTHER

PERMITTED

COUNTRIES.17BIIM0323U/M-2820860-17/26Rethinking

bondsWe’re

overweight

very

short-term

bonds

for

incomeHighershort-termratesandtheinvertedU.S.

yield

curvemakeTreasurybills

–with

maturities

ofayearorunder

–moreattractive

for

theirincome

and

lower

duration

risk.

Money

marketfundshaveseenrecordinflowsasa

result.U.S.

Treasury

3-month

bill

rate,

2013-2023U.S.

money

market

fund

flows

and

total

assets,

2008-202380060040020005.555434.5423.5312.520-200200720092011201320152017201920212023-1200720092011201320152017201920214-week

net

flowTotal

assets

(right)Source:BlackRock

Investment

Institute,with

data

fromRefinitiv

Datastream,

March

2023.

Notes:Thechart

on

theleft

showstheinterest

rateonthe3-monthU.S.Treasury

bill.

Thechartontheright

showstheweekly

net

flow

andtotalassets

ofU.S.moneymarket

funds.FOR

PUBLIC

DISTRIBUTION

IN

THE

U.S.,

CANADA,

LATIN

AMERICA,

HONG

KONG,

SINGAPORE

AND

AUSTRALIA.FOR

INSTITUTIONAL,

PROFESSIONAL,

QUALIFIED

INVESTORS

AND

QUALIFIED

CLIENTS

IN

OTHER

PERMITTED

COUNTRIES.18BIIM0323U/M-2820860-18/26Strategic

viewsAsset

allocation

matters

more

in

the

new

regimeWethinkthe

costofgetting

the

asset

mixwrong

islikely

tobe

muchhigherinthe

newregime

compared

withtheGreatModeration

–the

four-decadeperiodofstableactivity

and

inflation.Illustrative

impact

of

asset

mix

on

estimated

returns

in

Great

Moderation

vs

new

regime

of

heightened

volatility2%1%0%-1%-2%40/60equity-bondGreat

Moderation80/20equity-bondNew

regimeFor

illustrative

purposes

only.

These

do

not

represent

actual

portfolios

and

do

not

constitute

investment

advice..

Source:BlackRock

Investment

Institutewith

data

fromRefinitiv

Datastream

andMorningstar.Returnsdata

asofMarch

2023.

Notes:T