BlackRock bets on AI-driven stocks rally but U.S. debt clouds 2025 outlook

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Firm does not expect a large U.S. rate reduction

BlackRock expects the artificial intelligence boom to continue to boost U.S. stocks next year and support economic growth more broadly, although rising U.S. government debt levels could threaten its upbeat 2025 forecasts.

While U.S. economic growth may cool a little next year, the Federal Reserve will likely not be able to meaningfully lower interest rates as inflation remains sticky and above the central bank’s target, the institute said. It does not expect interest rates to go below 4% from their current 4.5%-4.75% range.

“We are underweight long-term U.S. Treasuries on both a tactical and strategic horizon – and we see risks to our upbeat view from any spike in long-term bond yields,” it said. BlackRock this week announced plans to buy credit investment manager HPS Investment Partners for about $12 billion, in a deal that will further its offerings in private credit, a key area of growth for the New York-based asset manager.

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