Now remember, the yield curve plots the interest rates of the 10-year US Treasury note (long-term rate) and the 3-month US Treasury bill (short term rate).
When short-term interest rates become higher than long-term interest rates, it’s known as an inverted yield curve. When the yield curve inverts, it usually signals a recession is looming.
At the time of writing, the yield spread between the 10-year US Treasury and the 3-month US Treasury stood at about 18 points. This meant, we weren’t quite in ‘inversion territory’ yet.
However, at the end of March, the yield curve inverted for the first time since 2006.
And as it turns out, history shows, this event opens up a wonderful money-making opportunity.
Check this out…
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History shows that double, even triple-digit gains are up for grabs
The last time this yield curve saw a new inversion was in January 2006.
That kicked off a wave of recession fears and stock market concerns.
These fears proved true – but not before savvy investors made serious gains.
After the yield curve inverted n January 2006, the S&P went on to make over 25% in the next 21 months.
Interestingly, this scenario has played out throughout history.
Back in September 1998 – two years before the DotCom bust, the yield curve inverted. Two years later, the S&P500 peaked after generating a 55% return. The NASDAQ more than tripled over the same period.
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Now’s the time to be bold and invest
It takes time for a recession to take hold once the yield curve inverts. This varies throughout history, but it generally takes around 5 to 17 months. This means, we could likely see big gains between now and then.
So, don’t panic and sell your stocks for safer investments. Instead, be bold and buy.
I’ve identified a handful of opportunities set to profit from this event, in the marijuana, cybersecurity and healthcare sectors. For a limited time, you can claim this report free through the South African Investor, just go here for more details.
See you next week,
Managing Editor, Real Wealth