The ETF Portfolio Strategist: 02 JUL 2023
Trend Watch: Global Markets & Portfolio Strategy Benchmarks
Global markets rebounded last week, lifting our G.B16 Benchmark Index 1.7%. If the market momentum persists and pushes G.B16 above the previous June 15 peak, the case will strengthen for arguing that the recent rally has further room to run. See this summary for design details on the strategy benchmarks and this summary for how the metrics in the tables below are calculated.
The crucial hurdle is taking out the early-2022 high, which is still a long way off. In other words, it’s still premature to dismiss the possibility that we’re in the midst of a bear-market rally for global risk assets. But for now, the trend skews positive in a strong degree momentum appears set to push prices higher.
US real estate (VNQ) posted last week’s leading gain for G.B16’s opportunity set. It’s too soon to declare the bear market for property stocks over, but the 5-week run of higher prices for VNQ suggests that this market is stabilizing, and perhaps laying the foundation for the start of a new bull run at some point in the near future.
Meanwhile, US stocks (VTI) continue to show a strong upside bias. Last week’s rally lifted VTI to a 14-month high. As with VNQ, there’s still a long road ahead to take out the early-2022 high, but trend behavior suggests the rally still has room to run.
Commodities (GCC) and US Treasuries (IEF), by contrast, continue to look weak from a trend perspective. The iShares 7-10 Year Treasury Bond ETF is posting a deeply bearish Signal score (per the table above).
The slow slide for WisdomTree Commodity Index ETF continues. The fund slipped again for a second week and closed near the lowest level in more than a year.
Finally, keep your eye on emerging markets government bonds via EMLC, which is slowly but persistently clawing back last year’s losses. Part of the allure is the relatively high payout ratio. For the trailing one-year window, EMLC’s 5.66% yield is a factor behin the fund’s strong rally of late.