BlackRock's Rick Rieder warns investors of rising borrowing costs and praises short-term bond yields

BlackRock, the world's largest asset manager, predicts that benchmark US borrowing costs will hover around 5.5% for the next five years as investors grapple with inflationary pressures. The head of the BlackRock Investment Institute, Jean Boivin, cited factors such as ageing populations, fractious geopolitics, and costs associated with the energy transition as contributors to higher long-term borrowing costs. Boivin expressed doubts about the US central bank's ability to bring down inflation to 2% and expects inflation to be closer to 3% in the US over the next couple of years. BlackRock calculates that if 10-year yields persistently remain close to 5%, the costs for servicing US debt would be about 14% of the country's budget, putting significant pressure on governments.