New York - While Brazilian fixed income is experiencing a unique moment with the Selic rate at 15% per year, offering good returns to investors, the scenario in the United States is heading towards a different outcome. Benjamin Souza, managing director of BlackRock, projects that 2026 will be more challenging for those investing in American bonds.
For the asset manager with over $13 trillion under management, the Federal Reserve (Fed, the US central bank) still has three interest rate cuts ahead before reaching the neutral rate. Currently, the US interest rate is at 4%, after the Fed cut it by 0.25 percentage points in September 2025 – the first reduction since December of last year. But the pace may be slower than the market expects.
"When the rate cuts end, the market tends to penalize the durations of the bonds. And this tends to make the fixed income market more complicated next year. While the stock market tends to continue performing well," Souza said in a presentation to a group of journalists at the company's headquarters.
With tariff issues and other uncertainties on the horizon, the Fed may delay rate cuts. In this scenario, while 2025 was a good year for returns in US fixed income, 2026 promises to be more turbulent for this asset class.
The main factor keeping the Fed on alert is the local labor market. Job creation has slowed and the unemployment rate has risen, leading the Fed to state that "downside risks to employment have increased."
Federal Reserve Chairman Jerome Powell painted a worrying picture when he stated that "job creation is virtually at zero" when the numbers are adjusted. It is precisely this fragility in the labor market that is at the heart of the US central bank's monetary policy decisions.
The Fed has two mandates: to control inflation and to promote economic growth. And that puts it in a bind.
"Everyone keeps saying that tariffs are inflationary, but goods inflation is showing healthy margins. The Fed's focus has shifted: first it was inflation, now it has changed. They don't know whether they should worry more about inflation or growth," said Souza.
This is because the American economy is in an unusual situation: it continues to grow, but companies are not creating new job openings. According to Souza, there are three reasons that explain this paradox.
The first reason is that the government is broke and not hiring. The second reason is that, in the private sector, companies are protecting their margins in a competitive stock market (controlling costs to maintain their stock market valuations). And the third reason is the Artificial Intelligence (AI) revolution, in which companies are automating jobs or expect to do so.
According to Souza, the American economy is undergoing a profound structural change. While in recent decades economic growth came from consumption, it is now coming from investment in AI infrastructure, with the construction of data centers, chip manufacturing, and other things. And this shift in growth is only just beginning.
The unanswered question remains whether this growth will stimulate the job market and start generating new jobs.
As AI has gone from being just a pitch to a business, with companies charging for its use, other countries have joined the race. And the most important one is China.
"China can create better and faster infrastructure than the US, but it wasn't progressing because it didn't have the chips. Now they've gained access to older chips. We'll see how they develop now," stated the managing director of BlackRock.
According to him, it makes no sense to say that there is a bubble in the artificial intelligence sector. Perhaps some companies are overvalued, but it's not a sectoral issue, much less a problem of the American economy.
"If we look at the dot-com bubble in the 2000s, the companies weren't profitable. That's not what we see now. The companies already have business models and still have great untapped expectations for more business," he said.
Gold and the dollar are (still) strong.
Precisely because of growth driven by productivity gains, Souza cannot see a trend towards a weaker dollar against other world currencies. For him, the fiscal problem is not unique to the United States, with several Asian and European countries in the same situation. And the interest rate differential between the US and other countries will continue to be positive in attracting capital inflows to the country.
"Unless you tell me that Europe is going to 'move up a notch' and experience accelerated growth, we don't expect a weak dollar. The outflow from the US happened with the imminent threat of tariffs, but since April that flow has stabilized. I would say that whoever left the US for other countries at that time made a mistake," he states.
Another asset that tends to continue rising, despite the more than 50% increase this year, is gold. "We've seen the popularity of gold. When risk increases, you look for assets that help control volatility, and fixed income hasn't been playing that role. Furthermore, central banks are buying gold as a diversification strategy. With much higher demand and limited supply, gold should continue to rise," concludes Souza.
*The reporter traveled at the invitation of Avenue Securities.
