Axonic Capital in S&P Global: What May Be in Store for the U.S. Economy

Aug 9, 2022 | In the News

The Russian invasion of Ukraine has created many uncertainties for investors. As a result, many investors are using interest rates to help price these unknowns. S&P Global recently spoke with Axonic Capital Director of Research Peter Cecchini to learn more.

With the spread between the 2-year and 10-year U.S. Treasury now at 23 bps, after being at 150 bps last spring, Cecchini believes this decline may indicate that the U.S. is slowing down quickly. Historically, every time since 1980 that the 2-year/10-year spread reached zero or lower, the U.S. has entered a recession. Now, it is possible this could happen again. 

Even without higher interest rates, Cecchini says inflation is enough to impede the economy. According to S&P Global, inflation as a single force can “eventually harm corporate margins and earnings, weaken consumer spending, and dilute the impact of higher wages, all of which might eventually slow GDP growth and potentially cause a recession.”

Fortunately, there is a potential light at the end of the tunnel. Cecchini tells the publication that unless we encounter stagflation, “the inflation-induced slowdown itself may reduce inflation and, in effect, inflation will have snuffed itself out.”

Read the entire S&P Global article to learn more. 

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