With rapidly rising inflation, an aggressive rate hike campaign and persistent market volatility, there used to be more certainty that the U.S. was heading toward a recession. However, conflicting economic data points are now causing some investors to question the likelihood of such an event. On episode 99 of The Julia La Roche Show, host Julia La Roche turned to Peter Cecchini, director of research at Axonic Capital, for insight on why he believes it is not a matter of “if” a recession will occur but rather a matter of “when.”
According to Cecchini, three underlying reasons form the pillar of his cautious stance, including:
- The Second Derivative of Employment Trends: The most recent employment data mirrors what historically preludes a recession.
- The Inverted Yield Curve: The 2-year and 10-year Treasury yield curves have been downward-trending since March 2022, which most experts deem a classic signal that a recession is on the horizon.
- Tighter Lending Standards: Over 50% of lenders surveyed by the U.S. Federal Reserve have indicated a tightening of lending standards across the board.
In addition to explaining why we are headed toward a recession, Cecchini also provides his macroeconomic outlook, explores current market vulnerabilities and grants listeners an inside look at the opportunities on which he plans to capitalize when a likely recession ultimately occurs.
This entire podcast episode is available to listen to at your leisure here. If you have any questions regarding the potential of a recession or are interested in learning more about strategies to put in place to protect your investment portfolio, please do not hesitate to contact us.