Wall Street’s biggest asset manager is telling investors to take a breath. Jeffrey Rosenberg, portfolio manager of BlackRock’s Systematic Multi-Strategy Fund, says a 25-basis-point rate hike from the Federal Reserve would not meaningfully threaten risk assets, a view that runs counter to the anxiety currently priced into parts of the market.
The argument is straightforward: strong corporate earnings, particularly those driven by artificial intelligence investment, can absorb the pressure that modestly higher borrowing costs create. In Rosenberg’s framing, the structural tailwind from AI is doing more for equity valuations right now than a small rate move could undo.
What BlackRock is actually forecasting
Rosenberg’s comments are part of BlackRock’s broader mid-2026 investment outlook, which favors US equities as the asset class best positioned to weather a higher-rate environment. The thesis rests on earnings growth outpacing the drag from rising yields, a bet that requires corporate America to keep delivering.
On the fixed-income side, BlackRock’s modeling is equally measured. The firm forecasts a 2.5% one-year return for the Bloomberg US Treasury index even in a scenario where the Fed raises rates by as much as 100 basis points over the next year.
Rosenberg also noted that the Fed is, in his words, “in no hurry to raise rates,” a signal that the central bank is more likely to move gradually than to surprise markets with an aggressive tightening push.
The figure at the center of all this is Federal Reserve Chair Kevin Warsh, who is expected to take a firmly data-dependent approach to monetary policy. Rather than committing to a preset path, Warsh’s Fed would respond to incoming economic data, which reduces the risk of a policy overcorrection that could rattle markets.
Why the higher-for-longer framing is changing
The mechanism here is worth unpacking. When interest rates rise, the discount rate applied to future earnings increases, which mechanically reduces the present value of those earnings. That is why growth stocks tend to sell off when yields spike. But if earnings are growing fast enough, they can outrun the discount rate headwind. Rosenberg’s bet is that AI-linked productivity and revenue gains are doing exactly that for a meaningful slice of the US equity market.
Rosenberg manages the iShares Systematic Alternatives Active ETF alongside the multi-strategy fund, meaning his outlook shapes real capital allocation decisions, not just published commentary.
What this means for market positioning
Fixed-income investors face a more nuanced picture. A 2.5% projected return on Treasuries sounds modest, but in a scenario where rates rise 100 basis points, locking in that kind of outcome would represent solid risk management rather than missed opportunity. The key variable is whether the Fed actually moves that aggressively, or whether Warsh’s data-dependent posture keeps hikes smaller and more spaced out.
For crypto and digital asset markets, which have historically been sensitive to Fed policy through the risk-on, risk-off channel, a measured rate environment is generally constructive. The inverse has also been true: the 2022 rate shock that hammered equities hit crypto significantly harder, amplifying losses across the board.