The US 10-year Treasury yield reached 5.17% on Friday, marking its highest point since 2007 following a recent interest rate hike by the Federal Reserve. On September 16, the Fed increased its benchmark rate by 25 basis points to a range of 3.75% to 4.00% to combat persistent inflation.
David Spika, a strategist at Turtle Creek, suggests that the S&P 500 could see a 5% to 10% increase by the end of 2026. This forecast depends on a decline in crude oil prices, which closed near $92 per barrel on Friday, down from levels exceeding $100 earlier in the month.
Factors contributing to the recent drop in oil prices include the reopening of Saudi Arabia’s East-West pipeline and reported diplomatic discussions between US officials and an Iranian delegation at the UN. Spika notes that if oil continues to fall, the 10-year Treasury yield could drop to between 4.75% and 4.78%.
Spika highlights Microsoft and Berkshire Hathaway as preferred assets. Microsoft reported a 43% revenue growth for its Azure division in the latest quarter, while Berkshire Hathaway held $365.5 billion in cash and short-term Treasurys as of the end of June.
