Exposure rates of the Dorval Asset Management Range – 7th May 2021

Jerome Powell had cautioned that he would take all the time needed to assess the extent of the recovery under way on the labor market. April’s surprising figures – with unemployment rising to 6.1% vs. 5.8% expected (cf. chart 1) – demonstrate that it will indeed take some time to get a clear idea on job stats, even though the economy’s overall trend is extremely clear and positive.

US job stats do not yet show all effects of reopening and support programs

Unemployment rate / Total jobs


According to April’s job report, the US economy is still missing over 8 million jobs compared to the pre-pandemic period. These figures may look surprising, as other indicators – such as household confidence and business surveys – point to a very clear improvement in the job outlook (cf. chart 2). The pandemic crisis may have curtailed the relevance of statistics’ seasonal adjustment factors, while it is also possible that generous unemployment cover is slowing workers in returning to the job market and that sectors most affected by the Covid situation have not yet sufficiently opened. 


US households observe clear improvement on labor market
Conference Board consumer survey

Jobs easy to get / Jobs hard to get


While these disappointing figures should be followed by much more upbeat stats over the months ahead, they lend further credence to central banks’ patient stance. The Bank of England offered further evidence of this on Thursday May 6, when it sharply upgraded its outlook for growth, jobs and inflation for the short term, but with no immediate impact on policy. The bank believes that the British economy has a stronger ability to expand without inflation running away than it expected previously, and it therefore slightly downgraded its medium-term inflation projections (cf. chart 3). 


Bank of England’s inflation projections


Moderate US job figures and the overall attitude from central banks ward off fears of an abrupt surge in long-term rates, thereby shoring up the equity markets. We maintain our market exposure rate and continue to invest in the theme of reopening of sectors most affected by the Covid crisis, as well as industries set to benefit from green deal programs.



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