With the AI infrastructure buildout fueling a surge in credit market bond issuance, alongside escalating fears of an "AI credit bubble burst" and a sharp rise in long-dated Treasury yields pressuring the Nasdaq 100, seasonal data compiled by Bank of America research suggests that September of the second year of a US presidential term typically proves unfavorable for high-risk equities—particularly tech stocks reliant on distant cash flows and highly sensitive to fluctuations in risk-free rates—while being more supportive of the US dollar and commodities such as crude oil, gold, and silver.

BofA strategists emphasize that institutional and retail investors should guard against a negative confluence of rising interest rates, credit market repricing, and seasonal equity weakness, though historical win rates are not deterministic predictions. Final market direction will hinge on the earnings delivery trajectory of major tech firms' AI applications, inflation data, and the path of Fed monetary policy expectations.

BofA's September Playbook: Equities May Bleed, Commodities Could Lead Asset Allocation

As September approaches, a recent Bank of America report highlights key seasonal trends investors should monitor, especially as the market enters the second year of the presidential cycle amid crucial midterm elections. Noted financial commentator and investment analyst Mike Zaccardi, citing the BofA research on social media, notes that global equities may face headwinds while commodities and the dollar could surprisingly flash bullish signals.

Historical data charts from BofA show that major US equity indices typically underperform during this September window. The Nasdaq 100 displays a distinctly bearish trend: historically, in Septembers of the second year of a presidential term, the index has declined 70% of the time, with an average return of -0.66%. Similarly, the small-cap benchmark Russell 2000 faces a historically weak month during this cycle phase, with a downside probability of roughly 64%.

Conversely, BofA's historical data indicates a robust bullish trend for the dollar. In Septembers of the second presidential year, the Bloomberg Dollar Index has risen as much as 80% of the time. Additionally, since 2000, in five of the six most recent second-year presidential cycles, the dollar has strengthened against the yen, showing a clear bullish tilt.

Commodities also present a favorable picture. Brent crude demonstrates strong support—rising approximately 67% of the time in such Septembers—while silver, typically more volatile, averages a gain of about 1.73% during these months. Gold also exhibits historically strong performance during this period.

Wall Street's bullish sentiment toward gold has intensified recently, driven by the Treasury's unexpected expansion of long-term debt buybacks and growing concerns over the timely repayment of the US government's record-high debt burden. With Treasury Secretary Bessent pushing to lower long-end yields, reinforcing a weak-dollar and currency-devaluation trade logic, gold has surged sharply. Over the past three weeks, gold futures markets have seen record inflows exceeding $22 billion, with positioning quickly turning crowded.

Citigroup strategist Dirk Willer projects gold at $5,000–$6,000 per ounce over the next year, citing Treasury intervention, risks of uncontrolled term premium on US debt, a softer dollar, and a restart of the "de-dollarization" trade. Deutsche Bank offers a year-end base target of $4,700–$5,100, underpinned by central bank purchases and ETF inflows as two non-price-sensitive demand sources—gold ETFs have seen net inflows of roughly 1.5 million ounces over the past 30 days and about 4 million ounces year-to-date, while central bank gold buying reached $38.88 billion in Q1 2026.

Bridgewater founder Ray Dalio has again warned about US fiscal conditions. He suggests that Treasury Secretary Bessent's recent announcement to expand long-term bond buybacks, combined with surging long-dated Treasury yields and Japan reducing its exposure to US bond markets, may signal that US fiscal policy is approaching a critical inflection point. If debt issues are not addressed promptly, the US could face a more severe debt crisis in coming years, prompting Dalio to advise investors to increase gold holdings.

Commodities Take the Baton: The 5% Long-Bond Red Line Tests Fiscal Deficits and the AI Financing Boom

In Septembers of the second presidential year, the Nasdaq 100 historically declines about 70% of the time with an average return of -0.66%, while the Russell 2000 drops about 64% of the time. In contrast, the Bloomberg Dollar Index rises about 80% of the time, the dollar strengthens against the yen in five of six samples since 2000, and Brent crude climbs about 67% of the time. Consequently, BofA's baseline September strategy is to reduce directional beta in long-duration tech stocks and small caps, moderately increase dollar exposure, and add commodity assets such as traditional energy and precious metals.

Led by Michael Hartnett, the BofA strategist dubbed "Wall Street's most accurate forecaster," the team's "long gold as the optimal play" thesis—echoing Deutsche Bank's view that gold is in an "explosive rally phase" and other major banks' bullish calls—fundamentally points to the same structural investment theme: the US government's ever-expanding debt, $1.4 trillion in interest payments, and a wave of AI corporate bond issuance are all competing for long-term capital, pushing up term premiums, from which gold benefits. And if rising yields threaten fiscal sustainability and risk assets, policymakers must find ways to lower financing costs, making gold the hedge against the "bond value impairment–policy intervention–declining dollar purchasing power" loop.

Hartnett ranks "long gold" as the top trade, viewing it as the best tool to hedge dollar depreciation, bond disorder, and asset inflation. His underlying judgment is that US debt could approach $50 trillion by around 2029, while the AI financing frenzy is further competing for institutional funds that traditionally flow into long-term Treasuries. Hartnett further treats the 30-year Treasury yield at 5% as a systemic risk watershed—his strategic threshold, not an officially stated Treasury target. If Bessent successfully pushes long-end yields back below 5%, rate-sensitive assets could see a phase of valuation repair; if intervention fails, markets may interpret "high yields plus a weak dollar" as a sign of fiscal credit deterioration rather than economic strength, triggering a chain reaction of dollar decline, risk-asset deleveraging, and credit spread widening.

BofA's proprietary Bull & Bear Indicator has risen to 9.5, sitting in "sell" territory. Thus, the Hartnett-led strategy framework advocates hedging dollar credit dilution with gold, going long on commodities and natural resources needed for AI buildout, while shorting AI bonds and remaining wary of highly leveraged hyperscale cloud providers, private credit, and cyclical financial assets. The BofA strategist team states that if long-end yields remain elevated while the dollar weakens concurrently, investors should reduce exposure to highly leveraged AI infrastructure, lower-rated data center debt, and private credit, rotating instead into gold, energy, resource stocks, and short-duration high-quality credit.