- Fundstrat’s Tom Lee expects the 10-year Treasury yield to fall below 5% within six months, signaling easier financial conditions ahead for risk assets like tech stocks and crypto.
- Lee forecasts Bitcoin’s four-year cycle bottom is occurring now and predicts the asset will close above $100,000 by year-end, with Ethereum reclaiming its previous high near $5,000.
- Lee reiterated his S&P 500 target of 8,200 to 8,400 by year-end, citing accelerating Q3 earnings growth of nearly 30% and upward revisions of over 20% to 2027 EPS estimates.
In an interview with CNBC on Monday, Fundstrat’s Tom Lee said he expects U.S. bond yields to normalize over the next six months as inflation pressures ease, citing strength in technology stocks and crypto as leading indicators of easier financial conditions. “I think there are, over the next six months, softer readings on inflation,” Lee explained, which he believes will allow the Federal Reserve to “walk back from its hawkishness” and bond yields to normalize.
Lee predicted the 10-year Treasury yield could fall below 5% within six months, arguing that “anything under 5% would be interpreted by markets as really positive for risk-on.” He pointed to market leadership as evidence, noting that tech stocks making new highs and crypto’s strong performance signal investors are anticipating a shift in monetary conditions. “These can’t do well in the face of tightening monetary conditions,” Lee added.
Lee remains bullish on equities, emphasizing that accelerating earnings growth has made the market less expensive. “Even Q3 earnings are probably going to come in at almost 30% growth,” he said, with EPS revisions for 2027 earnings up more than 20% since the start of the year. He reiterated his forecast for the S&P 500 to reach roughly 8,200 to 8,400 by year-end while acknowledging a possible correction between mid-October and midterm elections.
On crypto, Lee declared that Bitcoin’s four-year cycle bottom is occurring now and expects it to finish the year above $100,000. He also predicted Ethereum would reclaim its previous high of just under $5,000, calling crypto’s third-quarter resilience a leading indicator for what he expects to be a “pretty explosive” fourth quarter for stocks. Bitcoin traded around $85,900 at the time of writing, while Ethereum hovered near $2,700, according to data from Stocktwits.
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