September kicked off by kicking the stock market in the teeth, underscored by the Dow posting its worst day since the surprise early August rout.
But history shows that bonds also tend to wobble after Labor Day, with the Bloomberg global bond aggregate index logging a negative total return for each of the last seven Septembers, according to Jim Reid, Deutsche Bank’s global head of economics and thematic research.
Reid also found that 10-year Treasury yields have been higher in seven of of the last eight Septembers. The last nine Octobers also have seen higher Treasury yields.
“One argument for why this pattern may occur is that global bond issuance (government and corporate) dries up over the summer holidays (encouraging a bond rally) and then surges in September and October (encouraging a sell-off),” Reid wrote, in a Tuesday client note.