September is historically, on average, the worst month of the year. That doesn’t necessarily mean it has been negative, because it hasn’t, but it’s the month with the lowest average return. This year it also has the added uncertainty of an election year and the honor to host the Harris-Trump presidential debate and the FOMC meeting where the market expects the first rate cut of the cycle. So far, 2024 can be considered a good year both for bonds and equities, but as you can see in the chart below, it has some characteristics of an atypical year: (1) Banks are the best performers YTD, (2) Gold and Silver follow, with the U.S. dollar weakness in the background. (3) European equity indexes have risen almost the same as the Nasdaq. (4) EM equities are in the middle of the pack even as the Bovespa is the worst performer of the chart, and (5) Treasuries and IG bonds have not moved significantly on the eve of the rate cut cycle. Will this distribution of returns by asset class hold from here to the end of the year?
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