David Ader, Columnist

Don't Count Out Seasonal Patterns to Predict Rates

Yields tend to rise into May and June, and drop toward the end of year; 2017 may be no exception.

January 3, 2017 at 11:00 PM UTC

David Ader is the former chief macro strategist at Informa Financial Intelligence and held similar roles at CRT LLC and RBS/Greenwich Capital. He was the No. 1 ranked U.S. government bond strategist by Institutional Investor magazine for 11 years, and was No. 1 in technical analysis for five years.

A slowing in the fall.
Photographer: Christopher Furlong/Getty Images

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Bond strategists use many tools in attempting to forecast the path of interest rates, ranging from straightforward data analysis, to parsing the statements of Federal Reserve officials, to looking for trading patterns. The challenge lay in weighting these methods in terms of their market influence for time frames from the immediate to the very long haul.

There is, however, one simple technique that has proved very reliable when trying to provide a year-ahead outlook: monitoring seasonal patterns in interest rates and the yield curve. Simply put, there is a strong tendency for yields to rise into the May-June period and drop heavily into the end of year; 2017 may be no exception.