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BlackRock Cuts Treasuries Exposure on Hedging Cost as Bonds Fall

  • Foreign buying will slow down from some investors, Rieder says
  • Benchmark yields climb as factory shipments, new orders rise
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BlackRock's Rieder on Corporate Bonds, Treasuries

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BlackRock Inc. is reducing its exposure to long-dated U.S. Treasuries as increased hedging costs from Japan to Europe make the debt less alluring to some foreign investors.

Yields on benchmark U.S. 10-year notes are negative for Japanese buyers and about zero for euro-based investors who pay to eliminate currency fluctuations from their returns, even after yields climbed Monday as regional data showed increases in factory shipments and new orders. That’s caused life insurers and other long-term asset managers to turn to corporate securities or mortgage-backed obligations to lock in higher interest rates.