that investment Experts have warned that deeper stock market A correction could appear in 2027 as economic growth slows and inflation declines after a period of high expansion.
Current market conditions remain supportive of risk assets in the near term, said Chance Finucane, chief investment officer at Oxbow Advisors.
However, he expects a more challenging backdrop next year when investors start comparing economic data with the strong growth and inflation numbers recorded in the first half of this year, Finucane said in his report. interview With David Lean Published July 16.
The forecast adds to a growing debate about how sustainable the rise is artificial intelligence– Related stocks, which have led much of the market’s gains in recent years.
According to Finucane, a deeper decline may occur in 2027 as growth rates appear to slow and inflation trends continue to slow.
He noted that AI-related stocks could continue to rise until the end of the year, supported by strong investor enthusiasm. However, the risk of a correction may rise as investors begin to price in slower economic growth year-on-year.
“For the remainder of this year, there may be a deeper correction starting in these AI names and it could go further. We wouldn’t be surprised if the enthusiasm and greed around this trend continues and picks up later in the year, but we’re looking at 2027. We think there’s potential for a deeper decline next year because you’ll continue to see some decline in the main.
Impact on risky assets
The combination of moderate growth and low inflation is typically less favorable for riskier assets, raising the possibility that the broader prediction of a market decline could become a reality next year, the strategist said.
Along with its expectations for a market correction, Oxbow Advisors continues to favor short-term fixed-income investments over long-term bonds.
The company remains focused on Treasuries, investment-grade corporate bonds and municipal bonds with maturities of about three years or less, Finucane said.
The strategy is designed to allow investors to reinvest at higher returns if inflation and interest rates rise.
The company also increased its exposure to two-year Treasuries after yields rose above 4%, holding those rates for clients.
According to Finucane, longer-term bonds could remain unattractive for extended periods if the current interest rate cycle continues, making shorter-dated holdings a more flexible option for investors navigating uncertain market conditions.
While he expects volatility to continue through the remainder of the year, Finucane noted that greater risks to stocks could emerge in 2027, when slower growth and lower inflation could lead to a deeper stock market correction.
