BofA sees August setting up as tough for stocks; dollar, gold favored
View original at seekingalpha.comBofA sees August setting up as tough for stocks; dollar, gold favored [August 2026 Yellow Desk Calendar Among Office Supplies] spawns/iStock via Getty Images Investors heading into August may want to keep one hand on the steering wheel and the other near the hedge button…
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The dollar has tended to perform particularly well against the British pound and Australian dollar in August, with the seasonal trend becoming even stronger during the second year of the U.S. presidential cycle.
60% confidenceAugust through October has historically been the weakest rolling three-month period for the S&P 500, while the U.S. dollar, gold and bonds have often outperformed during the same window.
60% confidenceSeasonal weakness in late summer isn't necessarily bearish for the longer term; it has often set the stage for one of the market's strongest periods, with November through January averaging a 3.54% gain for the S&P 500.
60% confidenceGold has historically strengthened while equities weakened and Treasury yields declined, making it one of the report's preferred seasonal hedges against stock market volatility.
60% confidenceThe Dow Jones Industrial Average has historically been the most resilient major stock index during August, while Hong Kong's Hang Seng Index has been the weakest performer; international equity markets generally have underperformed U.S. stocks during August.
60% confidenceAugust has historically favored lower government bond yields, with the U.S. 30-year Treasury yield tending to decline, particularly in the second year of the presidential cycle.
60% confidenceUSD/ZAR is one of Bank of America's preferred seasonal trades, particularly if markets shift toward a risk-off environment.
60% confidenceBank of America has maintained a defensive market stance since late May, reinforced by the historical August-October seasonal weakness pattern.
60% confidenceEnergy is a notable exception to the broader risk-off backdrop, with the Bloomberg Energy Index historically gaining in August and crude oil prices tending to strengthen during the final third of the month.
60% confidenceSeasonality is only one input among many for investors, but the historical evidence suggests August has often rewarded defensive positioning, stronger exposure to the U.S. dollar and gold, and caution toward equities until the market enters its historically stronger November-through-January period.
60% confidence