Liquidity sources for market could start fading in second half of year, says iCapital's Sonali Basak
Summary
Sonali Basak, Chief Investment Strategist at iCapital, discusses the market outlook, forecasting the S&P 500 could reach 7500-7800 but advising hedging due to fading liquidity in the second half. She also updates the 10-year yield range to 4-4.8%, warning that moves above 4.5% could cause market disruptions.
- S&P 500 can rise to 7500-7800 based on fair value.
- Earnings are growing but multiple expansion limited.
- Liquidity sources from first half may fade in second half.
- 10-year yield range moved to 4-4.8%, 4.8% is a danger zone.
- Consumer spending still strong but tax refund benefits fading.
- Software sector has retraced but still uncertain.
- Energy prices remain elevated, contributing to inflation.
- IPOs and AI capex may create competition for capital.
Trade Ideas
S&P 500 to 7500-7800 target
The S&P 500 can continue to rise to 7500-7800 based on fair value, supported by earnings growth, but further multiple expansion is unlikely. However, liquidity sources that drove the first half are expected to fade in the second half, creating a non-linear path and making hedging necessary.
10-year yield danger above 4.5%
The 10-year Treasury yield is forecasted in a range of 4% to 4.8%. Yields between 4% and 4.5% are manageable, but if the yield exceeds 4.5% meaningfully and approaches 4.8%, it would create a danger zone that could cause broader market hiccups. This is a key level to monitor.
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This CNBC video, published May 08, 2026, features Sonali Basak discussing SPY, 10-Year Treasury Yield. 2 trade ideas extracted by AI with direction and confidence scoring.
Speakers: Sonali Basak · Tickers: SPY, 10-Year Treasury Yield