Positive momentum continued to lift risky assets last week, based on a set of proxy ETFs for the major asset classes. For the fourth straight week, the risk-on trade prevailed. The ongoing rally continues to pare the red ink in the trailing one-year-return column, which is inching closer to an even split between winners and losers.
Leading the winners last week: foreign junk bonds via iShares International High Yield Bond (HYXU). The latest pop in markets around the world left only two losers last week: investment-grade US bonds (BND) and inflation-indexed Treasuries (TIP), which posted fractional declines for the week through Mar. 11.
Last week’s buying spree continued to lift an ETF-based version of the Global Market Index (GMI.F)–a passively managed benchmark that holds all the major asset classes in market-value weights. GMI.F climbed 0.9% for the five trading days through Mar. 11, marking the fourth weekly gain for the benchmark.
Meantime, the one-year ledger is no longer mired with across-the-board losses. The four-week rally has lifted nearly half of the major classes into positive territory. Foreign junk bonds (HYXU) are also in first place for the trailing 252-day period, climbing by nearly 5% through Friday vs. the year-earlier level on a total-return basis. But there’s still plenty of red ink, and broadly defined commodities (DJP) are still in last place with a hefty slide in excess of 20%.
Despite the improvement for the one-year profile, GMI.F remains underwater for the trailing one-year period. Although the losses have eased recently, the benchmark remains in the red by 2.0% for the year through Mar. 11.
From a US perspective, the upbeat economic reports of late have thrown cold water on the notion that a new recession is near for the world’s largest economy. But the mood is still weak, according to the latest survey data for investors. The Wells Fargo/Gallup Investor and Retirement Optimism Index slipped to a two-year low in this this year’s first quarter, Gallup reported last week. But as recent market action suggests, the markets are inclined to climb a wall of worry these days.
