CNBC recently turned to Axonic Capital Director of Research Peter Cecchini to help investors better understand the current environment that the Fed Reserve is trying to navigate. According to Cecchini, “the Fed Chairman isn’t speaking markets.” While the Fed may feel like he’s sending an appropriately hawkish message, he believes he is not. Rather, the Treasury market and the equity market have responded in opposite ways.
“It makes a lot more sense to go with short-duration treasuries and other asset classes, like structured credit, where you can get much better downside protection relative to the risks we see ahead,” Cecchini explains. He also expresses that our yield curve is still deeply inverted, and that one important thing the equity market is missing is that the yield curve will normaliz before bull markets can have a sustained run.
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