BlackRock Leads Investors Worldwide With ‘Follow the Fed’ Mantra

If the flattening virus curve is what lured buyers back to global markets, then it’s central bankers who are telling them where to go.

Treasuries. Investment-grade debt. Fallen angels. Bond ETFs.

Jerome Powell and his peers have drawn a road map for recession-be-damned traders to ride the market rebound. And the investing world is losing no time getting onboard -- including the biggest asset manager of them all.

“We will follow the Fed and other DM central banks by purchasing what they’re purchasing, and assets that rhyme with those,” Rick Rieder, head of BlackRock Inc.’s global allocation team, said in a blog post this week.

The biggest monetary put in history is giving the some $7 trillion fund manager bullish conviction as it sells interest-rate volatility and buys long-duration bonds, while cushioning the economic downturn with a hefty cash position.

Allocation plans like these are being adopted from London, Geneva to New York, belying the prolonged virus-spurred lockdown and the reversal in the credit cycle.

Whether the opportunity to front-run stimulus has already passed is fast becoming the question.

Fed's balance sheet is surging as it hoovers up assets

“The stimulus seems to be endless,” said Dirk Thiels, head of investment management at KBC Asset Management in Brussels. “Buy what the central bank has been buying and in the short-term it’ll be a good strategy.”

He’s turned neutral on fixed income from underweight on expectations rates will stay low for longer.

To date, the U.S. central bank alone has announced crisis facilities that could ultimately total more than $10 trillion across multiple asset classes. It’s chosen BlackRock to shepherd several debt buying programs on its behalf.