Tony Dwyer of Canaccord believes that recession fears linked to Treasury yields are exaggerated.

Wall Street may be overestimating recession risks.

Tony Dwyer of Canaccord Genuity is focusing on optimistic activity in another part of the bond market, while investors are concerned about the inversion between the five-year and 30-year Treasury Note yields.

The three-month versus five-year yield has become more favorable for the U.S. economy, as it has steepened, according to Dwyer.

The firm's chief market strategist stated on CNBC's "Fast Money" on Monday that the yield curve, which measures the difference between what a banker lending institution receives and pays, versus what they charge or invest, is driving the lending and the firm does not look for a recession because of it.

Dwyer recognizes that the bond market is indicating economic difficulties, but not to the extent of causing a recession.

The fear is definitely present. Asia is facing more lockdowns, while Europe is heading towards a recession due to the ongoing ground war. The U.S. is also being affected by higher rates, which is slowing it down.

The Federal Reserve is predicted by Dwyer to increase rates in the upcoming months.

Inflation is high, and rates are expected to increase, according to Dwyer. Despite a potential slowdown, the Fed is constrained and must still raise interest rates.

Dwyer believes that, based on historical trends during similar backdrops, the stock market will be significantly higher this time next year, as he sees stocks as a hedge against inflation and plans to buy around weakness.

But for now investors may want to brace themselves for wild market swings.

“We call it tumultuous”

Dwyer stated that volatility is an opportunity and referred to it as tumultuous.

Dwyer predicts that the slowing economy will provide some inflation relief in the year's second half, which will pause Fed rate hikes. He lists interest rate sensitive plays as his best contrarian ideas.

Dwyer stated that the market appears to be pricing in a recession trade because the areas that should perform well with higher rates have been underperforming.

The stock market index S&P 500 ended at 4,575.52 on Monday, and it has declined by 4% year-to-date.