As the month of September approaches, investors may want to exercise caution when it comes to long-dated bonds. According to a recent article by Bloomberg, history suggests that longer-maturity bonds may face a traditionally terrible month. Over the past decade, government bonds globally with maturities of over 10 years have posted a median loss of 2% in September alone.

This trend is not limited to any particular region or country, as longer-maturity bonds have faced similar challenges across the globe. The article highlights that this historical pattern has been observed in both developed and emerging markets, making it a global phenomenon.

So, what could be the reasons behind this historical trend? One possible explanation is that September tends to be a month of heightened market volatility, which can lead to increased interest rate risk for longer-maturity bonds. As central banks begin to tighten monetary policy and raise interest rates, the yield on longer-maturity bonds may increase, causing their prices to fall.

Another factor that could contribute to this trend is the changing macroeconomic environment. In recent years, many central banks have implemented unconventional monetary policies to stimulate economic growth, which has led to a prolonged period of low interest rates. However, as these policies are unwound and interest rates begin to rise, investors may become more risk-averse and seek safer havens for their investments, leading to a decrease in demand for longer-maturity bonds.

It’s worth noting that past performance is not always indicative of future results, and there are many factors that can influence bond prices and interest rates. However, this historical trend serves as a reminder for investors to be cautious when investing in longer-maturity bonds during the month of September.

While long-dated bonds may offer attractive yields compared to shorter-term instruments, their performance in September has historically been underwhelming. Investors should be aware of this trend and consider diversifying their portfolios to minimize exposure to these types of bonds during this time of year.