Thread by @RickRieder

In our latest @blackrock Blog Post, we contend that in the tug-of-war between the #economic damage stemming from the #coronavirus lockdowns, and the fiscal and #MonetaryPolicy response, it’s the latter factor being underestimated by #markets: bit.ly/3exVSlN

Still, while #policy is clearly supportive of #markets in the near term, we’re concerned that the longer run #asset class returns of the 2020s might end up being considerably more meager than we’ve come to historically expect.

Clearly, this has a lot to do with our valuation/#yield starting point today, and we expect @USTreasury Bills to return close to 0% and longer-term government #bonds are not likely to return more than 2% annually. #Inflation rates will be lower too.

In our view, many #investors in high-quality #fixedincome assets are going to find it difficult to achieve satisfactory #portfolio returns from here, and there’s no help in sight from forwards in the U.S., or from other regions/curves in the developed world.

Where does all this leave #investor opportunity? For many weeks now we’ve been arguing that while some #equity exposure still makes sense in a #portfolio context, middle-quality yielding #assets could well represent the risk/return sweet spot for those with some patience.