Fed Pivot Odds Increase but Risks Remain: What to Keep an Eye on
With just three weeks left to the year, nearly all corners of global markets are on track to post gains for 2023, based on a set of index ETFs. The US stock market is still leading the field by a wide margin. Meanwhile, commodities are the downside outlier.
Vanguard Total US Stock Market (NYSE:VTI) close on Friday (Dec. 8) with a 21.1% year-to-date gain. That’s far ahead of other markets. The second-best performer this year – developed-markets stocks ex-US (VEA) – is up 12.5%.
Commodities overall are struggling this year, in no small part due to sliding energy prices. The US crude oil benchmark (West Texas Intermediate) is down more than 11% year to date.
A broad measure of commodities is doing better, but the 4.5% loss this year for WisdomTree Enhanced Commodity Strategy Fund (NYSE:GCC) is a reminder that beta for the asset class remains on the defensive.
The general upswing in most markets has lifted the Global Market Index (GMI) this year. GMI holds all the major asset classes (except cash) in market-value weights and represents a competitive benchmark for multi-asset-class portfolios.
GMI’s 14.5% year-to-date gain not only marks a strong rally for the benchmark, it’s also a reminder that beating a passive, multi-asset-class strategy has been tough in 2023.
The question is whether this year’s widespread gains in nearly everything are a sign of things to come in the new year? As The Wall Street Journal observes today:
“The simultaneous surge across assets has sparked debate about whether the ‘everything rally’ marks the arrival of a lasting bull market—or just a fleeting sugar high at the end of the Federal Reserve’s tightening cycle.”
The answer is almost certainly linked with upcoming decisions by central banks,
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