January delivered a strong rebound in the global markets, lifting all the major asset classes amid a powerful renewal of risk-on sentiment. The strong start to 2019 contrasts with December’s rout that inflicted deep losses far and wide.

The new year, by contrast, is off to a bullish start that’s unusually potent and far-flung. It’s unclear if the resurgence in animal spirits has legs for the rest of the year. Or is the latest bounce merely a temporary snap-back to 2018’s year-end slump? In any case, for the first time in a year-and-a-half, all the major asset classes posted monthly gains.

US real estate investment trusts (REITs) earned the biggest return in January: MSCI REIT Index surged 11.8%, the benchmark’s strongest monthly increase in more than seven years.

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Although all the major classes bounced back last month, there was a wide range of results. The softest gain was in cash: S&P US T-Bill 0-3 Month Index edged up 0.2% in January.

The muscular tailwind blowing across global markets generated a strong gain for the Global Market Index (GMI), an unmanaged benchmark that holds all the major asset classes in market-value weights. The benchmark rose by a strong 5.9% in January, the best monthly gain for GMI since 2011.

US stocks jumped 8.6% in the first month of 2019, based on the Russell 3000 Index, which nearly reversed December’s hefty 9.3% loss. Meantime, investment-grade US bonds continued to trend higher in January. For the third straight month, the Bloomberg Aggregate Bond Index posted a gain, rising 1.1% (albeit the weakest advance last month other than cash among the major asset classes).

Despite last month’s powerful revival in risk assets, the trailing one-year changes tell a different story, at least from the perspective of January’s end-of-month view. Compared with the US stock market and GMI – each suffering red ink for the annual comparisons — the Bloomberg Aggregate Bond Index (black line in chart) earned a modest 2.3% over the trailing 12-month window.

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