Technical analyst Paul Ciana from BofA Securities noted in a January 29 report that February's seasonal patterns suggest a hawkish tilt for U.S. rates while offering pockets of strength for small-cap stocks and crude oil. Ciana's historical analysis indicates that the U.S. 5-year Treasury yield has risen about 65% of the time in February, with an average increase of roughly 9.5 basis points. The 2-year to 10-year Treasury yield curve also tends to flatten, narrowing about 67% of the time with an average move of approximately 7 basis points. This month's movements require more tactical timing rather than a static approach, as significant rotations occur within February itself. The Russell 2000 index shows its strongest performance during the first and middle thirds of the month, with approximately a 70% probability of gains during these windows. Ciana also highlighted the strength of Hong Kong stocks around mid-month, with the Hang Seng Index more likely to rise than fall during this period. Rate movements are similarly concentrated in specific periods. U.S. 2-year and 5-year Treasury yields tend to climb during the first 20 days of February, while curve flattening and weakness in Australia's 10-year yield appear more frequently toward month-end. In currency markets, the report noted the U.S. dollar often strengthens against the Japanese yen early in the month, while showing weakness against certain Latin American currencies (including the Mexican peso and Chilean peso) in early February. The analysis also found the dollar typically gains against the South Korean won during the latter part of the month. Commodities overall show modest support, led by oil. Brent crude historically tends to rise in February, with its most consistent strength appearing during the final third of the month. Ciana also looked beyond the calendar month framework, examining "holiday-to-holiday" windows since 2000. One of the strongest signals occurs between National Pizza Day (February 9) and Random Acts of Kindness Day (February 17), during which small-cap stocks and U.S. 5-year yields have risen in the vast majority of years. He also observed an upward trend for oil prices between Valentine's Day (February 14) and Easter (late March/early April). The report included cautions about applying these patterns. The S&P 500's February seasonal performance tends to be muted, with its mean and median paths typically flattening out near month-end. For Ciana, this implies that tactical timing within the month matters more than a simple directional bet.
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