Shenwan Hongyuan research says the core trading range for the 10-year US
Treasury yield in H2 is likely 4.5%–5%, with inflation expectations linked to
oil prices the dominant short-term driver. In an optimistic case yields could
fall toward about 4.3%; in a downside case they could break above 5%. The dollar
index is short-term positively correlated with oil during supply
shocks—safe-haven flows and relative fundamentals tend to lift the dollar with
oil—and would face further upside if a US‑Iran conflict escalates; after
tensions ease the dollar’s core range could revert to 97–103. Dollar trend
Strength typically accompanies sustained Fed tightening; September’s hike is
done, and if future moves are isolated rather than a trend tightening cycle,
dollar appreciation risk is more contained. Medium-term, US term premium is
likelier to rise than fall as risks shift from cyclical volatility to fiscal
sustainability concerns; the Fed faces a threefold challenge of inflation
persistence, weak employment, and automatic long-end tightening amid a global
savings imbalance. Current US equity valuations are not low; larger or more
Persistent shocks would inflict greater downside on equity prices.
