US stocks eased last week, but the US stock market remains the undisputed leader for the major asset classes this year, based on a set of proxy ETFs through Friday’s (July 7) close.
The Vanguard Total US Stock Market Index Fund (VTI) fell 1.0% last week. Despite the modest pullback, the ETF remains close to a 15-month high after rallying from the October low. Since the start of the year, VTI has risen sharply by 15.0%.

Most primary tranches of global markets are posting gains so far in 2023, including foreign stocks and bonds. The main outliers on the downside: commodities (GCC) and real estate ex-US (VNQI). GCC has lost more than 5% since the beginning of the year; The VNQI is down 2.7%.
The Global Market Index (GMI.F) is up more than 10% this year. This unmanaged benchmark holds all major asset classes (except cash) in market value weightings through ETFs and represents a competitive metric for multi-asset class portfolio strategies.

Markets and risk appetite will be stress tested again this week when new US consumer inflation data is released on Wednesday July 12th. be modest compared to a sharp decline expected for the headline consumer price index (CPI), based on the consensus forecast from Econoday.com.

CapitalSpectator.com’s set model to estimate the way forward for the core CPI, which excludes food and energy, also foresees a drop in price pressure, but the decline is expected to remain gradual, according to the point forecast and leave this measure largely followed. price pressure well above that of the Fed. Target of 2% for the foreseeable future.

Meanwhile, the Fed is expected to raise interest rates by 1/4 point at the next FOMC meeting, based on Federal funds futures. Beyond that, the market is pricing in modest odds of an extended pause, perhaps signaling the end of tighter policy for the cycle. This week’s CPI data will be read carefully to decide if this outlook seems plausible.
By some accounts, forecasts of an inflation spike suggest that US bonds look attractively priced after more than a year of flat to negative performance. Although the Vanguard Total US Bond Market Index Fund (BND) is up 1.0% this year, the ETF is still far from recovering from the steep downgrade of 2022.

Better days for bonds could come, or so some analysts predict. One of the factors is the rise in current yields, which gives more incentive to expect better performance for fixed income securities.
“Right now you’re getting good income from fixed income,” said Katie Nixon, Chief Investment Officer for Wealth Management at Northern Trust. The rates are not only attractive in absolute terms, but also on a “real world” basis in terms of comparing returns with the outlook for inflation in coming years, she told Morningstar.com.
This week’s CPI report will offer a first reality check on this reasoning.
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