Nearly all the major asset classes posted gains in the trading week through Friday, Aug. 12, based on a set of proxy ETFs. Despite the upside bias in prices, the crowd will continue to wrestle with deciding if the recovery is a bear market rally for risk-on or the start of a new bull market.

For US stocks, traders are focused on the S&P 500 Index’s rally that’s lifted the benchmark close to a 50% retracement of the loss suffered earlier in the year. “In my studies taking out 50% is bullish,” Nargis Motorwala, an independent trader tells Reuters.

For last week, at least, sentiment tilted firmly to optimism overall. The leading bounce was posted in US real estate investment trusts via Vanguard Real Estate Index Fund (VNQ). The ETF rallied to its highest close in over three months.

Despite the strong recovery in REITs in recent weeks, rising interest rates continue to pose a threat to this sector, which is prized for generating relatively high yields via property holdings. But the Federal Reserve is still expected to tighten monetary policy in the months ahead to tame inflation and the resulting increase in Treasury yields will become more competitive vs. REITs. Consider: VNQ’s trailing 12-month yield is 2.89%, according to Morningstar.com, or just fractionally above the current 10-year Treasury yield (2.84%).

Most global markets posted gains last week. The exception: inflation-indexed government bonds ex-US via SPDR FTSE International Government Inflation-Protected Bond ETF (WIP), which slipped 0.2% — its first weekly decline in the past four.

The Global Market Index (GMI.F) also recovered last week, rising 2.7%. This unmanaged benchmark, maintained by CapitalSpectator.com, holds all the major asset classes (except cash) in market-value weights via ETFs and represents a competitive index for portfolio strategy analytics.

For the one-year return window, commodities remain the only slice of the major asset classes with a positive return. WisdomTree Commodity (GCC) is up more than 16% over the past 12 months through Friday’s close.

The rest of the field continues to post losses over the past year, with foreign corporate bonds (PICB) showing the biggest one-year decline – more than 20% below the year-earlier close on a total-return basis.

GMI.F is down 9.1% for the trailing one-year window.

Looking at the major asset classes through a drawdown lens shows that all the ETF proxies are currently posting peak-to-trough declines well below their respective medians since 2012.

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