(Adds background on market moves, Fed rate expectations)
March 20 (Reuters) - BlackRock Investment Institute said
on Monday it was downgrading credit and preferred short-term
bonds for income, with strategists pointing to financial cracks
from rapid interest rate hikes.
"We stay risk-off: underweight developed market (DM) stocks
and trim credit to neutral. But we are ready to seize
opportunities as macro damage gets priced in. We overweight very
short-term government paper for income and prefer emerging
markets," BlackRock Investment Institute strategists wrote in a
weekly note to clients.
BlackRock Investment Institute is an arm of U.S.-based
investment firm BlackRock that provides proprietary investment
research.
Treasury yields rose on Monday as the takeover of Credit
Suisse and central bank steps to shore up liquidity helped allay
investor concerns as they gauge whether the Federal Reserve may
pause its rate-hike cycle later this week.
Major central banks, faced with the
risk of a fast-moving loss of confidence
in the stability of the financial system, moved on Sunday
to bolster the flow of cash around the world.
BlackRock Investment Institute said it expects the Fed to
raise interest rates on Wednesday. Interest rate futures show
73% odds that the U.S. central bank will raise its benchmark
overnight interest rate by 25 basis points, with 27% odds of no
hike, according to CME Group's FedWatch tool.
(Reporting by Noel Randewich; Editing by Paul Simao)
