Global asset management giant BlackRock announced on Monday that it has upgraded its rating on US long-term Treasury bonds from "underweight" to "neutral" as investors prepare for the Federal Reserve's potential resumption of rate cuts as early as this week.

Jean Boivin, head of BlackRock Investment Institute, stated in a report: "We are adjusting our tactical investment stance for the next 6 to 12 months to 'neutral' on long-term US Treasuries, ending our long-standing 'underweight' strategy." Boivin explained that while structural factors such as global loose fiscal policies continue to drive yields higher in the long term, Treasury yields may decline further in the short term, providing room for adjustment.

As of Monday's close, the US 10-year Treasury yield fell 2.3 basis points to 4.034%, marking its fourth consecutive week of decline. However, the yield remains above the 52-week low of 3.622% reached in September last year. Treasury prices move inversely to yields.

The CME FedWatch tool shows that investors widely expect the Federal Reserve to announce a 25 basis point rate cut after Wednesday's FOMC meeting concludes, lowering the federal funds rate target range to 4% to 4.25%.

In response to this outlook, BlackRock has also adjusted its stance on short-term US Treasuries. Boivin stated: "We are also downgrading short-term US Treasuries from 'overweight' to 'neutral'."

Boivin noted that the evident weakness in the labor market provides reasonable justification for Fed rate cuts, which should help ease inflationary pressures. Nevertheless, he emphasized that the current macroeconomic outlook remains "murky," and core inflation continues to run above the Fed's 2% target.

Latest data shows that US core CPI excluding food and energy rose 0.3% month-over-month in August, translating to an annualized rate of 3.1%, indicating persistent inflation stickiness.

Despite inflation risks, BlackRock maintains its "risk-on" stance. Boivin stated: "We believe that while US economic growth is slowing, it remains resilient, and corporate earnings will continue to be robust." He expects that in a scenario of economic deceleration without recession, rate cuts will support US equities, particularly benefiting growth themes represented by artificial intelligence.

Boivin added that market drivers are shifting from previous tariff and policy uncertainties to the interplay between inflation, economic growth, and government debt. "In this environment, rate cuts will help boost investor confidence and may reignite corporate hiring."

In terms of long-term strategic allocation, BlackRock maintains its "underweight" stance on long-term government bonds, preferring inflation-linked bonds instead. Boivin pointed out that the coming months could present vastly different macroeconomic scenarios: if the labor market weakens further, rate cuts may be insufficient to offset pressure on risk assets, and BlackRock would be prepared to reduce risk exposure; if hiring activity rebounds quickly, inflationary pressures could resurface, requiring investors to demand higher risk premiums for holding long-term Treasuries, potentially reigniting concerns about Fed independence.

On Monday, all three major US stock indices closed higher. The S&P 500 gained 0.47%, the Nasdaq rose 0.94%, both reaching record highs, while the Dow Jones Industrial Average advanced 0.11%.

BlackRock believes the Fed's policy decision this week will serve as a crucial turning point for global markets. If rate cuts are implemented smoothly, both US equities and long-term Treasuries could receive support under conditions of controlled inflation and sustained economic growth. However, markets should remain vigilant about potential risks of inflation resurgence.