On the occasion of this bond market adjustment, stocks reestablish their medium term potential

"Developing Dorval Asset Management in accordance with the performance of the managers we select in our funds"
Stéphane Furet
Deputy-CEO in charge of the Manageurs range
For Dorval Asset Management, the combination of technically very overbought indices, and of the acceleration in the interest rate correction has triggered an 8% correction in international financial markets (S&P500 -8%, Eurostoxx 50 -9% since the end of January).

After a 2017 year that came in below expectations, the January upturn in wages in the United States to +2.9% on an annualized basis fits in with the Federal Reserve’s anticipations. This movement, which is normal at this stage in the cycle, provoked a brutal adjustment in inflation anticipations and of the level in interest rates. This adjustment materialized as a temporary trigger of volatility on the markets.

Dorval Asset Management’s market analysis is one of a correction after the overbought stage of the cycle. The markets had tilted into a “negative asymmetry”, making them more vulnerable to “bad surprises” …

The management team does not think that interest rates and inflation are a lasting problem, all the more so since central banks continue to desire this inflation supplement.

According to Dorval Asset Management the American bond market correction is already well advanced. In a context of robust and visible global growth, the current world market consolidation reestablishes the medium term potential of stocks.

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