The major asset classes delivered across-the-board gains for a second month in a row in May. Excluding cash, everything was up last month, led by a sizzling rally in foreign inflation-linked government bonds.

The FTSE Russell World Inflation Index ex-US surged 4.0% last month, the strongest gain in over a year for the benchmark. The combination of reviving inflation anxiety around the world and a falling dollar lit a fire for this measure of foreign bonds, which is shown below in unhedged US dollar terms.

Excluding cash (3-month Treasuries), which remained flat, the weakest performer last month: US junk bonds. The iBoxx Liquid High Yield Bond Index edged up 0.2% in May. That’s a relatively tepid performance, but keep in mind that this benchmark has enjoyed eight straight monthly gains.

US stocks ticked higher too, rising 0.5% via the Russell 3000 Index in May. US investment-grade bonds gained 0.3% last month.

Year to date, only three slices of global markets are underwater year to date: foreign investment-grade corporates, foreign government bonds in developed markets, and US investment-grade bonds. Otherwise, bullish winds prevail in 2021.

The tailwind in risk assets continued to lift the Global Market Index (GMI) in May. This unmanaged benchmark (maintained by CapitalSpectator.com), which holds all the major asset classes (except cash) in market-value weights, rose 1.1% last month, marking the fourth straight monthly increase for the benchmark. Year to date, GMI is up a solid 7.6%.

Comparing GMI to US stocks and bonds shows that broad global asset diversification continues to exhibit strong upside momentum for the past 12 months. GMI’s 30.2% return for the trailing one-year window is far above the essentially flat performance of US bonds over the span. Meantime, GMI’s trailing one-year gain represents more than two-thirds of the one-year increase for US equities – an impressive run when you consider that GMI passively owns all the world’s major asset classes with far less risk.