November seasonals are supportive for stocks and bonds

Investing.com -- November’s seasonal trends are favorable for both equities and bonds, while Latin American currencies and oil could face pressure, according to Bank of America.

“November seasonals are supportive for stocks and bonds (yields down)” and typically indicate a lower-yield bias, aligning with its broader Q4 view that the U.S. 30-year Treasury yield will fall and the 2s/10s curve will flatten, strategist Paul Ciana said in a Wednesday note.

BofA highlighted that the Russell 2000 and Nasdaq historically perform best in November, gaining 2.64% and 2.47% on average, respectively.

The S&P 500 tends to rise 1% and the DAX 1.65%. When the S&P 500 ends October in positive territory for the year, “there is a strong tendency for Nov-Dec gains,” Ciana said, with the index up about 80% of the time and averaging a 4% rise.

Seven of 11 S&P 500 sectors show a bullish tilt in November, led by Consumer Discretionary, Information Technology and Industrials — all up more than 3% on average over 70% of the time. Healthcare also tends to outperform, while Energy, Utilities and Real Estate lag.

In fixed income, Ciana flagged that yields “tend to be lower in November,” with the U.S. 30-year yield down more than 10 basis points 77% of the time.

Eurozone and Japanese long-end yields typically move in the same direction, while spreads such as the U.S. 2s/10s flatten by roughly 5 basis points.

In the foreign exchange (FX) market, the dollar generally strengthens against Latin American peers, with the U.S. dollar–Brazilian real pair rising in November about 68% of the time by 1.31%.

The greenback also tends to firm modestly versus the Norwegian krone and Canadian dollar but struggles against the euro and Swiss franc in the final week of the month.

Meanwhile, oil and energy prices historically weaken during November. BofA said WTI crude “was down 63% of the time by about 3%,” Ciana said, particularly in weeks two to four, when it fell on average nearly 4%.

Metals, by contrast, show a slight upward bias, though with less consistency.