BlackRock says long-term Treasury yields may keep rising even if the Fed stands pat

BlackRock’s investment institute said on Aug. 4 that the Federal Reserve may leave rates unchanged, but that alone is unlikely to do much to stop the rise in long-term U.S. Treasury yields. Wei Li, chief investment strategist at the BlackRock Investment Institute, said the firm’s base case is that the Fed will probably stay on hold rather than raise rates. Even so, Li said policy uncertainty during a period in which Waller serves as Federal Reserve chair would continue to fuel investor concern over future borrowing costs. In BlackRock’s view, that concern would keep pressure on long-dated Treasury yields. The call does not hinge on an additional rate hike. Instead, it centers on how uncertainty around future policy and financing conditions could continue to weigh on the long end of the U.S. government bond market, even if the central bank refrains from tightening further.