Peter Cecchini, Head of Research at Axonic Capital, joined CNBC’s Closing Bell on June 17 to share his perspective on market conditions, Fed policy and opportunities in private credit.
While recent U.S. economic data has held up, Cecchini pointed to weakening regional manufacturing surveys and a rise in continuing jobless claims as signs that growth is beginning to slow. He believes the risk of stagflation has “increased quite a bit,” citing sticky inflation and slowing demand, conditions that could delay any Fed easing.
Cecchini views current equity valuations, at roughly 23x forward earnings, as stretched, particularly given the current macro backdrop. “This is really, in our view, the perfect time to think about investing in alternatives, private credit, structured credit,” he said, noting that these markets offer stronger risk-adjusted returns in a tight lending backdrop.
He also discussed pressures on long-term Treasury yields, pointing to the impact of deposit flight and balance sheet constraints at regional banks. “Yields have stayed sticky for a bunch of reasons… I would expect Treasury yields to be lower as well” by year-end.