Kasikorn Securities (KS) wrote that although U.S. Treasury yields may temporarily surpass the 5% mark, the upward pressure on yields is unlikely to be sustained for an extended period, maintaining a positive outlook for domestic factors within Thailand.
The brokerage has revised its target for the SET Index, raising it to 1,680 points. This new projection is now based on an end-2027 target, incorporating an assumed SET EPS for 2027 of THB 105 and applying a long-term average price-to-earnings ratio of 16x.
From a macroeconomic perspective, Kasikorn identifies external factors as key risks, particularly through 4Q26. Prolonged geopolitical tensions remain a significant concern, potentially exacerbating the energy supply crisis and keeping inflation elevated for a longer period.
These developments could prompt central banks worldwide to resume interest rate hikes. Such moves are expected to push long-term U.S. Treasury yields higher, and should they exceed 5%, this would clearly pressure investment sentiment.
Nonetheless, even if yields temporarily rise above the 5% threshold, Kasikorn anticipates that the circumstance will not persist. The interest rate hiking cycle is expected to be limited, especially from the U.S. Federal Reserve, as inflation rates are now below the policy interest rate. Concurrently, the U.S. Treasury Department has adopted management strategies aimed at reducing pressure on the bond market.
Additionally, the upcoming U.S. midterm elections in November could result in a divided government, a scenario which historically has led to declining U.S. Treasury yields and a weaker US dollar.
Kasikorn expects U.S. Treasury yields to rise in the near term, causing volatility in financial markets; however, yields are unlikely to remain above 5% for a sustained period. The brokerage maintains a constructive view on the Thai stock market, highlighting that domestic factors—including an upward revision in GDP forecasts and positive momentum in SET EPS—continue to provide support.
