As the BRICS de-dollarization mission continues into 2024, investment management firm BlackRock has issued a major warning about the US dollar. The company is warning investors who have cash in reserve to start putting some of it into bonds.
According to a report from BlackRock, the bond market has seen some volatility amid uncertainty surrounding interest rates and the Federal Reserve's monetary policy. On Friday, the yield on ten-year government bonds briefly fell below 4.5%. The decline came after a weak April jobs report and a surprise increase in unemployment rates.
“It's time to migrate back to fixed income, especially with yields at these levels,” said Steve Laipply, global co-head of iShares fixed income ETFs and co-author of the BlackRock article. With the Fed still in limbo, it is nearly impossible to time the market correctly.
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According to BlackRock, bonds have historically been the strongest performers during hold periods. That's why investment managers recommend using bonds to protect US dollars. “It's a very attractive opportunity for investors to right-size their fixed income side of the portfolio,” Laipply said. Additionally, BlackRock recommends using a bond fund or an ETF. The company says investors should use a holistic approach, which can include a combination of both, to get diversified exposure cheaper for their assets.
The US dollar has had a tumultuous 2024, partly due to the BRICS intervention. The bloc is actively looking to abolish the US dollar and influence other countries to do the same. With BlackRock's latest warning to secure your US dollars in other ways, it's clear the alliance's mission is succeeding. Inflation and interest rate hikes have only furthered the de-dollarization initiative.