The market is in one of its most unstable positions in the past few years. The new coronavirus outbreaks caused a mixed reaction among consumers, as most worry that the economy will receive a brutal hit because of the current context. Wall Street witnessed a weak end of the week for stocks, and the consumer confidence index has fallen by 13.5%.
“With the 10-year yield TMUBMUSD10Y, 1.285% expected to recover to 2% by the end of the year, according to our U.S. rates strategy team, we do not think that the cautious rotation can be sustained much longer and expect crowds to move toward more economic-sensitive sectors and value to outperform again” noted Citi analysts.
Nonetheless, the current economic environment might lead to better times for value. The research director from Janus Henderson Investor has declared that the next half of the year might lead to value outperformance.
Value might have a brighter future than anticipated. One crucial factor is the unpredictability of this current situation. The Delta variant of COVID has led to a fast rise in cases; however, it is not guaranteed that the number of infections will continue to go up, especially since the number of vaccinated people is also growing; therefore lockdowns might not be necessary again.
It is also worth noting that experts predict that the United States will continue to see growth in the near future. For instance, gross domestic product is anticipated to reach 6.1% by the end of the year, and 4.8% next year, which is a significant increase compared to past years.
“We haven’t seen growth rates this high in some time and that’s why we think … value can keep outperforming, even once the rate of growth peaks,” explained Samana Sameer, who is a senior global market strategist at Wells Fargo Investment Institute.