BofA: Q3 Seasonality + Presidential Cycle Overlap Gives Nasdaq, USD, and Copper a Historical Tailwind
Alina Collins
BofA strategist Paul Ciana layers Q3 seasonality, July effects, and Year-2 presidential-cycle data into one playbook: long Nasdaq and the dollar, short Treasuries and commodities — but the internal rhythm is uneven, and September is the weak link.
Why use Q3 2018 as the template?
Ciana sees the current market environment as similar to Q3 2018, when the historical path favored long U.S. equities and the dollar, short Treasuries and commodities.
He flags a tension: Year 2 of the presidential cycle has historically been associated with weaker equity performance, tilting the backdrop toward defense.
This means → the template gives a direction, but the presidential-cycle filter is a warning: tailwind does not equal risk-free. The two signals pull against each other.
Nasdaq's Q3 "perfect record" — how strong is it really?
The Nasdaq 100 has risen in every Q3 since 2018. July stands out: the index has gained about 68% of the time, averaging +1.72%.
But the report explicitly warns that September has historically been weak — the seasonal tailwind is not evenly distributed.
In plain terms = July and August are the good stretch; September is the stumbling block. You cannot hold through the quarter without watching the calendar.
Dollar vs. EM currencies — which two pairs show the best odds?
USD/BRL has risen in Q3 roughly two-thirds of the time, with an average gain of 4.73%.
USD/ZAR carries a similar win rate of about two-thirds, averaging +2.74%.
This means → BofA treats these two pairs as the best vehicles for a Q3 dollar-strength trade, rather than playing the broad dollar index.
Overseas sovereign yields: down in Q3, then a bounce?
Developed-market sovereign yields outside the U.S. have historically trended lower in Q3: German Bund yields decline about 64% of the time; Australian 10-year yields about 65%.
July and August show the clearest drops, but yields typically bounce around September.
In plain terms = if you go long overseas bonds — betting yields fall, prices rise — the window is July–August. By September, be ready to exit. The report also lists Australian equities as a historically strong Q3 asset.
Copper's July rally — does it contradict the broader framework?
NYMEX copper futures have risen in July about 65% of the time, averaging +1.84%.
Yet the overall framework says "short commodities" — copper's monthly signal diverges from the quarterly commodity direction.
This reflects an internal inconsistency the report itself does not resolve. Investors must decide whether to follow the monthly signal or the quarterly theme.
Will the historical pattern hold this year?
Every conclusion rests on historical statistics — probabilities, not certainties.
Today's macro and policy landscape — tariffs, rate paths, geopolitics — does not perfectly overlap with any historical template.
Put simply = this report offers a weathervane, not a GPS. It tells you which way the wind has blown historically, but this year's wind speed and obstacles are yours to judge.
Content is for reference only, not financial advice.