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BlackRock, the world’s biggest asset manager, said on Monday it had reduced its underweight position in U.S. Treasuries after the recent surge in yields, but still expects yields to move higher in the months ahead.

Short-dated U.S. bond yields have shot up 25 basis points this month to around 0.98%, set for the biggest monthly jump since 2018, as investor bet the Federal Reserve will hike rates soon to contain sticky inflation.

“We reduce our underweight of U.S. Treasuries after the surprising yield surge this month, while still seeing the direction of travel for yields as higher,” BlackRock said in a note.

The asset manager said that while it had expected yields to rise, the speed of the yield spike had been “striking.”

“On a strategic or long-term horizon, we still view the outlook for nominal government bonds as challenging and maintain our large underweight,” BlackRock said.

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