BlackRock's Tactical Views on Latest Asset Classes (Next 6-12 Months) stock market U.S. Equities (Overweight): While policy uncertainty and supply chain disruptions weighed on near-term growth, the AI theme provided strong support for corporate earnings. Stronger profitability and margins of U.S. companies than other developed markets support their higher valuations. European Equity (Neutral): Europe's progress on the solidarity and pro-growth agenda could boost economic activity, but BlackRock is cautious until it sees how it responds to structural challenges. Japanese Equities (Overweight): The return of inflation and shareholder-friendly corporate governance reforms have brightened the outlook for Japanese equities. Emerging Market Equities (Neutral): Valuations and domestic policies are supportive, but geopolitical tensions and concerns about global growth keep them on the sidelines for the time being. China Equities (Neutral): Trade policy uncertainty and limited policy stimulus keep it cautious. At the same time, the report also looks at the structural challenges facing China, such as an aging population. Fixed income markets Long-term U.S. Treasuries (underweight): Persistent budget deficits and inflationary pressures are likely to push up term premiums (compensating for the risk of holding long-term bonds) over the long term. Short-term U.S. Treasuries (Overweight): In a tactical view, short-term Treasuries are treated as cash. Eurozone Government Bonds (Neutral): Yields are attractive, especially in favour of marginal countries such as Italy and Spain. Emerging market local currency bonds (Neutral): Local currency bonds are more attractive than hard currency debt because debt levels have improved in many emerging markets and currencies have been resilient in the face of trade uncertainty. Investment-grade (IG) credit: Prefer investment-grade credit in Europe over the US. The report is underweight on long-term investment-grade credit as spreads are tight and prefer to take risk in equities.