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Last Week’s Global Rally Led by US Stocks

American equities posted the highest return for the major asset classes for the trading week, based on a set of exchange traded funds through Friday’s close (Nov. 27).

 

By James Picerno

 

The broad-based rally lifted nearly every corner of global markets. The only exception: US investment-grade bonds.

Vanguard Total US Stock Market (VTI) rose for a fourth straight week, closing on Friday at a record high.

“This rally has been notable as the rotation from Growth to Value has continued to gain momentum despite the negative news flow of Covid cases surging around the country and lockdowns again being imposed in various parts of the nation,” says Chris Zaccarelli, chief investment officer at Independent Advisor Alliance.

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The only setback last week: a broad measure of US investment-grade bonds. Vanguard Total US Bond Market (NYSEARCA:BND) edged fractionally lower. Despite a slight loss, BND continues to trade in the upper range of a tight band that’s prevailed since August.

With most markets rising last week, the Global Markets Index (GMI.F) continued to trend higher. This unmanaged benchmark, which holds all the major asset classes (except cash) in market-value weights via ETFs, gained 1.8%, the fourth straight weekly increase.

For the one-year trend, US equities continue to lead the major asset classes. VTI posted a 19.3% total return at Friday’s close vs. the year-ago level. Emerging markets stocks are a close second via Vanguard FTSE Emerging Markets (NYSEARCA:VWO), which is up 17.9% for the trailing one-year window.

Real estate(NYSEARCA:IYR) remains the biggest – and only – loser on a one-year basis. The deepest shade of red ink: Vanguard US Real Estate (VNQ), which is down 6.0% over the past year. The second-deepest one-year decline: Vanguard Global ex-U.S. Real Estate (VNQI), which has shed 5.8% for the last 12 months.

Ranking global markets by current drawdown continues to show that most of the major asset classes are at or near price peaks. Leading the winner’s circle at the moment: US stocks (VTI), which enjoyed a zero drawdown at last week’s close.

By contrast, broadly defined commodities (GCC) are still posting the deepest peak-to-trough decline: in excess of -40%.

GMI.F’s current drawdown is zero.