BlackRock: Expect Flat Bond Prices, 'Muted' U.S. Equity Appreciation in 2016

Dec 9 2015 | 7:49pm ET

(Reuters) - Investors should expect "little or no" price gains in bonds and "muted" appreciation in U.S. stocks during 2016, according to a report released on Wednesday by BlackRock's top investment strategists.

The New York-based asset manager's Investment Institute said bond gains will be limited as U.S. government debt has grown more expensive and markets prepare for Federal Reserve policymakers to raise interest rates.

Energy debt faces the possibility of "more pain" and defaults in 2016, BlackRock said. But the investment company said some corporate and emerging market debt does appear to be a better value than government bonds. That includes banks and insurers, who can add revenue as rates rise.

BlackRock's report said the company also recommends investment strategies beyond stocks and bonds, including opportunities in U.S. commercial real estate and emerging market infrastructure, the report said.

U.S. companies will have to increase earnings faster to bolster their stock prices in 2016, the report said, while Japanese and European stocks continue to benefit from aggressive central bank policy.

BlackRock, the world's largest money manager, manages $4.5 trillion in assets, as of Sept. 30.

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