you are in Research

US and Iran have finally reached an interim peace deal, a hopeful start to an eventual formal peace agreement. Going forward, it is imperative that the Strait of Hormuz reopens quickly and effectively for energy flows to resume as soon as possible.

We remain Overweight on Equities as corporate earnings backdrop remains supportive. We recommend using dips to accumulate quality stocks. We stay Neutral on Fixed Income and prefer an average duration of 4-5 years. We remain Neutral on Alternatives, holding off further allocation to private equity and credit until risk-reward improves. We maintain Neutral on Money Market to gradually deploy dry powder as market volatility presents opportunities.

We remain Overweight on US equities on resilient earnings and continued AI build-out, with a focus on AI infrastructure stack. We also retain a preference for Financials, Industrials and Materials. We remain Neutral on Japan as elevated valuations warrant a more selective approach, although structural reform momentum continues to support the medium-term investment case. We remain Overweight on EM Asia, with a constructive view on China’s technology and dividend plays as well as semiconductor sectors in Korea and Taiwan. Within ASEAN, we prefer Singapore.

We stay Overweight on Developed Markets (DM) Investment Grade (IG) to optimise for portfolio resilience amid recent bond-off, while reinforcing quality in a repriced world. We stay Underweight on DM USD High Yield (HY) as risk-reward remains asymmetric with sector mix being unfavourable. We stay Overweight on Emerging Markets (EM) IG and continue to favour ASEAN regional champion financials, Asian quasi-sovereigns and strategic SOEs. We stay neutral on EM HY as selectivity is required given company-specific risks on the balance sheets.

Brent crude oil price has already fallen significantly over the past month in anticipation of the interim peace deal. Under our Base Case expectation, with the re-opening of the Strait of Hormuz, further moderation in Brent crude oil price can then be expected in coming quarters as supply pressure eases, to USD 85 / bbl in 3Q26, USD 80 / bbl in 4Q26 and USD 70 / bbl in 1H27.

Our base case remains that diminishing geopolitical risk premia will erode a key pillar of USD support. In turn, market focus is likely to shift back toward monetary policy differentials. Overall, our DXY forecasts are still biased lower, at 97.9 in 3Q26, 97.0 in 4Q26, 95.7 in 1Q27, and 94.9 in 2Q27. Our call for Fed’s extended pause through 2026, implies a steady 3M compounded in arrears SOFR projection at 3.62% in 3Q26, 3.62% in 4Q26, 3.62% in 1Q27 and 3.45% in 2Q27. We continue to expect SOFR-SORA spread to normalize gradually from a historically wide level. We project 3M compounded in arrears SORA at 1.24% in 3Q26, 1.42% in 4Q26, 1.56% in 1Q27 and 1.64% in 2Q27.
We use cookies to improve and customize your browsing experience. You are deemed to have consented to our cookies policy if you continue browsing our site.