The Bond market is the driver of the stock market, given that the size of the bond market dwarfs that of the stock market. So when the stock market rallies, and the percentage of pension funds with stock and bond ratios needs to be adjusted. And given the recent Trump rally, and bonds selling off, stocks will need to be sold to purchase bonds. It’s that simple.

For 2016, the big issue is the sell off in Bonds.  The Qs (what we specifically trade for alpha and beta) have not participated in this rally, given the strength in the dollar (not pictured here).  So look for a traditional sell in the new year – whether it starts on 1/2 or it starts on mid January (which happens periodically).

bond seasonality

stock market seasonality


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