Peter Cecchini, Director of Research at Axonic Capital, was featured in a recent PitchBook analysis examining how the U.S. dollar’s recent volatility, including a multi-month decline followed by a recent reversal, is impacting leveraged loans and high-yield credit markets.
While the dollar hit levels not seen since 2021 against the euro and pound earlier this year, Cecchini discussed how these fluctuations create a “tension” between supporting U.S. exporters and managing domestic inflation.
“A weaker dollar supports U.S. manufacturers because it makes U.S. goods cheaper to foreign buyers,” he said, noting it provides an “incremental tailwind” to exporters. However, he warned that prolonged weakness can raise costs for issuers relying on imported inputs or dollar-priced commodities.
Cecchini also highlighted the critical link between currencies and rates, explaining how shifts in Treasury yields and cross-border rate differentials influence dollar demand, inflation expectations and borrowing costs for leveraged balance sheets.
Axonic continues to monitor the complex interplay between currencies and interest rates as they shape conditions across the leveraged loan, high-yield, and CLO markets.
Click here to read the full analysis.