Fascinatingly, for decades now there has been a #seasonal pattern to U.S. real #GDP growth whereby first quarter growth tends to come in lower than trend and then improves later in the year.
As to why this is the case, there are many theories, but we suggest that #inventory dynamics, weather, and the timing of #policy stimulus in the most recent decade could all play a part in persistent economic seasonality.
Regardless of the precise cause, though, it’s important for investors to take both #economic and #market seasonality seriously. Indeed, over the past decade we’ve seen a pattern in market performance whereby strong first-quarter returns are often followed by mid-year weakness.
And, interestingly, this is the case even outside the U.S., in #global and #emerging equity markets as well.
Perhaps less surprisingly, given this dynamic, the mid-year period has been one in which #bonds have performed well, as witnessed by the median month-over-month return of the 10-Year U.S. #Treasury.
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