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Despite market doubts about U.S. growth and tech, BlackRock see no recession signs and expect policy uncertainty to ease, keeping them overweight U.S. stocks, while long-term bonds remain unreliable diversifiers amid persistent deficits and inflation.

A busy week for central banks, with rate decisions from the Fed, BoJ, and BoE, alongside key economic data and earnings reports, while markets react to inflation data, economic concerns, and shifting policy expectations across the U.S., UK, and China.

Major policy shifts, including Germany’s fiscal boost and U.S. tariffs, create near-term risks, but BlackRock see AI-driven growth offsetting pressures from inflation and rising debt, keeping them positive on stocks over the next 6–12 months.

This week features a light economic data calendar alongside a Fed blackout period, with key events including Japan’s GDP, US CPI, and eurozone inflation, while US lawmakers face a critical deadline to avert a government shutdown. Last week, weaker-than-expected US data fueled stagflation concerns, leading to market volatility, a decline in the dollar, and a drop in equities, while China’s policymakers signaled targeted stimulus amid ongoing disinflationary pressures.

Market volatility is being driven by macro and foreign policy shifts alongside structural forces like AI, making tactical positioning crucial as AI’s impact on corporate earnings becomes more uncertain, with private markets playing a key role.

Markets focus on global PMIs, central bank decisions, and trade tensions this week, with key events including the ECB rate decision, US employment data, and China’s National People’s Congress, while last week saw US Treasury yields fall, equities rebound, and China adopt a more accommodative monetary stance amid tariff concerns.