iCapital Sees 10-Year Yield Hitting 5.3% If Oil Keeps Rising

iCapital has lifted its forecast for the 10-year Treasury yield to a range of 4.5% to 5.3%. According to the firm's strategist, the price of oil will determine where in that band the yield settles.

Dan Suzuki, who serves as iCapital's global investment strategist, shared his views on CNBC's Fast Money this week. He argued that the Federal Reserve's dot plot — its chart of interest rate projections — has become less important than the price of crude. That leaves open the question of how equities will fare if the current market trajectory continues.

The Range Is Set by Oil, Not the Dot Plot

Despite efforts by President Donald Trump and others, the Federal Reserve raised rates anyway. On September 16, it lifted its benchmark rate by a quarter point to 3.75%-4%.

That increase was the Fed's first since 2023. Oil trading above $100 a barrel had contributed to higher inflation since the summer.

Suzuki was direct in his assessment.

I don't think you even care about the dot plots. Just look at what oil prices are doing or what Trump is saying.

The clip was broadcast on CNBC.

Suzuki stated that the 10-year Treasury yield could touch either boundary of that range. The outcome hinges on how the conflict between the US and Iran, which has disrupted oil flows since it began, influences crude supply.

What a Move to 5.3% Would Imply for Stocks

Equity markets are already showing pressure below a seemingly calm exterior, according to Suzuki. The Nasdaq and small-cap stocks are six percent below their recent highs, and high-yield credit spreads have begun to expand.

But Suzuki cautioned that the cause behind a yield shift matters as much as the level itself. If declining yields reflect a fading war risk and steady economic growth, he explained, stocks would advance. Conversely, if they indicate concerns about an economic slowdown, they would not.

To protect against that risk, Suzuki recommends a barbell approach built on financials and healthcare stocks. He also favors private infrastructure as an inflation hedge, along with small hedge fund positions if volatility remains high. Those hedges look more attractive to him if oil continues to rise toward $120 a barrel.

He also mentioned cash as an often-overlooked hedge. Historically, household cash allocations are near record lows, Suzuki noted, even as cash begins yielding returns again.

Whether that calm persists may ultimately depend on oil rather than the Fed's dot plot.