BlackRock Favors Shorter Bonds to Hedge Volatility, Higher Rates

Interest rates and inflation will stay higher for longer than markets are pricing, increasing the attraction of short-dated bonds relative to longer-term debt, according to BlackRock Inc.’s research arm.

With consumer-price gauges remaining above central banks’ targets, expectations of rate cuts this year are misplaced, said strategists led by Jean Boivin, who have an overweight stance on high-quality short-term debt. They expect both the Federal Reserve and the European Central Bank to hike interest rates this week, they wrote in a note dated May 1.