This Shines in Today's Market

For close to two years now, this has been waving a huge red flag. SPECIAL OPPORTUNITIES [The Oxford Club Special Opportunities]( Note from Editorial Director Justin Fritz-Rushing: Today's letter comes from The Oxford Club's Director of Trading Anthony Summers. It was published on Tuesday in The Oxford Income Letter, one of the Club's premium publications. But considering it's about bolstering your defenses, I thought this was too important to keep behind a paywall - especially after the market weakness we witnessed this week. --------------------------------------------------------------- Keep It Short: Why Shorter-Term Debt Shines Today Anthony Summers, Director of Trading, The Oxford Club [Anthony Summers] After a couple of years of weak returns for stocks, the bulls are firmly back in control. Recession worries have vanished, and everyone's guzzling the stock market Kool-Aid once again. But here's the thing. While most investors searching for economic clues fixate on the stock market's performance, there's a far more accurate indicator they often overlook: the bond market. You see, the collective wisdom of the bond market (which is significantly larger than the stock market) provides a much more reliable barometer of economic health. And for close to two years now, it's been waving a huge red flag. I'm talking about the inverted yield curve. Marc alluded to this phenomenon in the January Annual Forecast Issue of The Oxford Income Letter, but a lot can change in just a few months. So let's take a fresh look at the yield curve and what it means for us as fixed income investors. In a typical environment, you earn higher interest rates by lending money over longer periods, because the extra interest offsets the added risks. Plotting this simple relationship produces an upward-sloping curve - hence the name "yield curve." However, when short-term rates climb above long-term rates, it causes the curve to "invert." This unusual circumstance has been one of the most precise predictors of recessions, having preceded all seven economic downturns since the late 1960s. We saw the yield curve start to invert in July 2022, and it has remained inverted for a record length of time, beating the previous record of 624 days. Historically, a recession has begun between six and 24 months after the curve has become inverted. At 21 months and counting, we're deep in the danger zone. Sirens should be sounding. Now, I know the rebuttal: Maybe this time is different. After all, the Fed is still projecting a "soft landing," many companies are hiring and the AI boom is underway. In other words, none of this feels like the cusp of a recession - especially compared with how things were a year ago. And of course, I'm not suggesting that you should start panicking or turn completely bearish on the market. Correlation is not causation, and while every recession in recent memory was preceded by an inverted yield curve, a recession has not followed every inversion. But even so, I do believe that investors should take the bond market's warning seriously and position their portfolios accordingly. How, you ask? By investing in high-quality, short-term bonds. There are a few compelling reasons to favor the shorter end of the yield curve today. First and foremost, your payout will be much greater. Thanks to the Fed's aggressive rate hike cycle, short-term Treasury yields are now hovering at nearly 25-year highs of 5% or more. And short-term corporate debt offers equally juicy yields. [Short-Term Bonds Are a Sweet Spot in Today's Market] As inflation cools, the real yields on these offerings will become even more attractive. And if credit conditions deteriorate, these elevated yields can help offset any potential capital losses on your bonds. Secondly, shorter-term bonds are typically the biggest winners when easing cycles begin because they are generally more sensitive to interest rate changes. So let's suppose the inverted yield curve's warning turns out to be correct and a downturn finally hits the economy in the next year. That could still bode well for short-term bondholders, who'd likely see solid price appreciation as a result of the Fed slashing rates. Time to Bolster Your Defenses While investors are obsessing over how many times the Fed might cut rates, they're missing an important message from the bond market: Stay defensive! Fixed income investors have a unique opportunity to position themselves strategically by favoring shorter-term, higher-quality debt securities that offer not only higher yields but also lower maturity risk. It's truly a no-brainer. For those of you looking to increase your exposure to bonds, The Oxford Income Letter is a great place to start. [Go here]( for more details on this publication. Good investing, Anthony Summers OPPORTUNITIES OF INTEREST - [For Free? Click Here to Get the Names and Ticker Symbols of the Top Dividend Stocks in the Market!]( - [Can you guess these FIVE simple letters? _ _ _ _ _ They've been the key to beating the market by more than 550% -- > Answer revealed HERE]( - [Discover the $12 Energy Company Paying a Nearly DOUBLE-DIGIT Yield That Just STUNNED Investors With Plans to Increase It Much Higher]( SPONSORED "It is abundantly clear that [this man]( is of genius mentality... His trading system is a game-changer!" [Alpesh Patel]( As one of the most respected names in finance, Alpesh Patel has quite the resume: - Hedge fund manager - World-renowned trading coach - Bloomberg host - CEO - Author of 18 books on investing - And more! He's seen and done it all. And TODAY... [He's sharing the 27-year-old trading secret he's relied on for decades]( once reserved for the world's richest investors (with $10M+ net worth!). [>> See it for yourself here. <<]( [The Oxford Club] You are receiving this email because you subscribed to Oxford Club Special Opportunities. Oxford Club Special Opportunities is published by The Oxford Club. Questions? Check out our [FAQs](. Trying to reach us? [Contact us here.]( Please do not reply to this email as it goes to an unmonitored inbox. [Privacy Policy]( | [Whitelist Oxford Club Special Opportunities]( | [Unsubscribe]( © 2024 The Oxford Club, LLC All Rights Reserved The Oxford Club | [105 West Monument Street](#) | [Baltimore, MD 21201](#) North America: [1.800.589.3430](#) | International: [+1.443.353.4334](#) | Fax: [1.410.329.1923](#) [Oxfordclub.com]( Your Legal Questions... Answered What is The Oxford Club? The Oxford Club is a financial publisher with a highly rated track record. We deliver unique and well-researched financial and investment ideas to our Members. What do you do? We share our team of experts' industry knowledge and timely insights with our Members so they have the financial literacy and tools needed to build a rich, fulfilling life. We do not provide any personalized financial advice or advocate the purchase or sale of any security or investment for any specific individual. Instead, the information we share is directed toward a larger audience of all subscribed Members. So you'll make me rich? Maybe! But not exactly. Our goal is to provide the research and information required to help you make you rich. Investment markets have inherent risks, and we can't guarantee future profits. Why should I trust you? We offer information based on what we think will provide the most value to our Members. Our business depends on Members' interest in our ideas and satisfaction with their results. We've been around for 30-plus years because our Members have continually chosen to stay with us (many of them for life). Nothing published by The Oxford Club should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed personalized investment advice. We allow the editors of our publications to recommend securities that they own themselves. However, our policy prohibits editors from exiting a personal trade while the recommendation to subscribers is open. In no circumstance may an editor sell a security before subscribers have a fair opportunity to exit. The length of time an editor must wait after subscribers have been advised to exit a play depends on the type of publication. All other employees and agents must wait 24 hours after publication before trading on a recommendation. Should I still consult my investment advisor? Any investments recommended by The Oxford Club should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.