Seasonal traits favor the Nasdaq 100, a stronger U.S. greenback and decrease international bond yields, in line with Financial institution of America. It is doable the market will do a repeat of the third quarter of 2018, BofA technical strategist Paul Ciana wrote in a observe Sunday that examined high trades for seasonality round third quarters, the month and the second yr of an American presidential cycle. That may argue for going lengthy U.S. equities and the U.S. greenback whereas shorting Treasurys and commodities, he mentioned, The financial institution mentioned the backdrop might turn out to be extra defensive as a result of this level within the presidential cycle has traditionally been related to weaker fairness efficiency. However the Nasdaq 100 has risen in each third quarter since 2018. July has been significantly sturdy, with the index advancing about 68% of the time by a mean 1.72%, though the financial institution cautioned that September has usually been weaker. BofA highlighted a number of different trades which have tended to outperform throughout these time durations. They embrace greenback energy versus the Brazilian actual and South African rand, decrease yields in developed markets exterior the U.S., and going lengthy Australian shares. Traditionally, USD/BRL and USD/ZAR have risen about two-thirds of the time throughout the third quarter, averaging 4.73% and a couple of.74% positive aspects respectively, BofA mentioned. On charges, the strategists mentioned abroad authorities bond yields have usually fallen throughout the third quarter, significantly in July and August. German Bund yields have declined about 64% of the time throughout the quarter, whereas Australian 10-year yields have fallen roughly 65% of the time. Extra broadly, international yields have tended to ease by a lot of the quarter earlier than rebounding in September. Financial institution of America additionally pointed to copper as a seasonal alternative, noting that costs have traditionally strengthened in July. NYMEX copper has risen about 65% of the time throughout July throughout all years, with a mean acquire of 1.84%.
