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BlackRock warned investors that bonds can no longer be relied on as a stabilizing force in portfolios, as rising debt levels and stubborn inflation pressures undermine the asset class’s traditional role as a safe haven. The world’s largest asset manager said recent volatility in global bond markets underscores a structural shift driven by heavier government borrowing and a “higher-for-longer” rate environment. That dynamic has left long-duration sovereign debt more exposed to sudden selloffs, particularly when fiscal and trade policy risks flare up. “In this environment, bonds no longer provide the same level of portfolio ballast,” strategists led by Jean Boivin at BlackRock Investment Institute, said in a note. “Any spike in long-term bond yields can heighten debt sustainability concerns, repeatedly leading to a moderation of policy extremes over the past year.” The firm remains tactically underweight long-term Japanese government bonds since 2023 and long-dated U.S. Treasurys since December 2025. BlackRock pointed to last week’s turbulence as a global phenomenon rooted in U.S. tariff threats, with the impact magnified in Japan’s government bond market by technical factors including new fiscal concerns following a snap election and weak demand at a long-dated bond auction. “Yet U.S. trade policy again ran into an immutable economic law: the U.S.’s need for sizeable foreign investment to finance its debt in a world shaped by greater bond supply and higher-for-longer interest rates,” the firm said.
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