The performance of major asset classes in 2018, in one chart

If you loaded up on stocks and commodities at the start of 2018, you’d be feeling pretty chuffed right now.

As seen in the simple-yet-excellent chart below from Macquarie Bank, those asset classes have outperformed all others so far in 2018 – just like 2017.

Just look at some of the year-to-date returns, remembering that we’re not even at the end of January.

Source: Macquarie Bank

Helping to fuel those gains, the US dollar index, lurking at the left of the chart, has continued to weaken, helping boost asset prices at the riskier end of the spectrum, especially those priced in US dollar terms such as commodities and US stocks.

While that’s helped to drive the price action so far this year, few will disagree that the performance of sovereign bonds — shown in grey — will be highly influential as to how asset prices fare over the remaining 11 months.

They’ve fallen modestly so far this year, an outcome has helped to boost confidence that the global economy is strengthening, helping to boost inflationary pressures, rather than spark fears of an imminent asset price correction.

However, if the losses in bonds become more than modest, it’s questionable whether the early trends of 2018 will last.

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