Paul Hickey on September Market Seasonality and Broadening Trade

September Market Seasonality

• 🗓️ Historically, September is a weak month for the markets, especially after strong summer performance.
• 📈 Despite the historical weakness, the last four months have seen positive gains, indicating an overbought market.
• 💡 If a dip occurs in September, it should be viewed as a buying opportunity, as the weakest part of the month is typically backend-loaded.
• ⚠️ The Federal Reserve's upcoming decision could be a catalyst for market weakness if it doesn't meet market expectations.

Broadening Market Trends

• 🎯 The broadening trade is expected to continue, particularly if 10-year Treasury yields remain contained below 4.50%.
• 📊 Strong breadth in small caps was observed after Jackson Hole, suggesting potential for small-cap outperformance.
• 📉 US yields have been contained relative to the rest of the world, challenging the idea of US exceptionalism in the market.

Treasury Market Dynamics

• ⚠️ A potential negative for bonds could be the court shooting down President Trump's reciprocal tariffs, impacting tariff revenue and the budget situation.
• 🌍 While US yields have been contained, UK 30-year gilts have reached their highest levels since 1998, indicating broader global interest rate concerns.
• 🔄 Market narratives are constantly changing, and the impact of tariffs on the bond market is an evolving consideration.