UBS On-Air: Market Moves

Will Trump's policy changes lead to near-term market volatility? Can earnings season stay solid amid anticipated market volatility? Will the Bank of Japan resume its rate hiking cycle this week? CIO's Belinda Peeters brings you the latest on this week's market themes.

Hear from top portfolio managers and business heads from UBS Asset Management’s Muni, Taxable Fixed Income, and Liquidity teams. They share views on the markets and what they believe you should be focused on within the fixed income space.

German December producer price inflation is due. This is not normally a major market concern, but as trade taxes and relative competitiveness become more of an issue, this is something investors might pay more attention to. German producer prices moved out of deflation in November.

US Treasury Secretary-nominee Bessent is a more orthodox cabinet nominee. Yesterday’s confirmation hearings saw generally articulate answers. The responses on trade taxes were troubling. Bessent’s idea that an appreciating currency offsets tariffs is not supported by recent evidence. The idea that US workers will not pay trade taxes is wrong. As he’s an intelligent individual, these views may reflect the beliefs of the incoming administration, not Bessent’s understanding.

Our first conversation of the year begins with thoughts around the recent rise in yields, along with where pockets of vulnerability and opportunity exist within fixed income as we enter 2025. Leslie and Ken also spend time sharing their overall outlooks, along with views when it comes to monetary policy, and positioning across the asset class. Featured is Ken Shinoda, Portfolio Manager for RMBS at DoubleLine Capital, and Leslie Falconio, Head of Taxable Fixed Income Strategy Americas with the UBS Chief Investment Office. Host: Daniel Cassidy

Yesterday’s US consumer price inflation data was benign. Consumer durable goods prices fell for a majority of the Biden administration. Although consumers do not focus on such prices when considering inflation, this deflation did boost consumer spending power. The abrupt market response reflects the problem with Federal Reserve Chair Powell’s “data dependency” mantra: any data release (however dodgy) prompts an extreme market response.

Rick rejoins Jason to begin a new year as the two discuss and share their views on the US macroeconomic environment, monetary policy and rates, along with exchange thoughts on allocation preferences across fixed income and equities. Featured are Jason Draho, Head of Asset Allocation Americas, UBS Chief Investment Office, and Rick Rieder, Chief Investment Officer of Global Fixed Income, Head of the Fundamental Fixed Income business, and Head of the Global Allocation Investment Team at BlackRock. Host: Daniel Cassidy

US December consumer price inflation should show modest headline gains. It is worth distinguishing inflation pressures and relative price changes. Egg prices are likely to rise sharply—egg producer prices rose 127.9% y/y in December. This is a supply shock. Unless Federal Reserve Chair Powell becomes a chicken farmer, they can do nothing about this.

Leslie rejoins the podcast to share CIO’s outlook for fixed income in 2025, including thoughts around the road ahead for monetary policy, what has been causing the rise in yields, and considerations when it comes to positioning within the asset class. Featured is Leslie Falconio, Head of Taxable Fixed Income Strategy Americas, UBS Chief Investment Office. Host: Daniel Cassidy

Markets have reacted to media reports suggesting that the next US administration will impose trade taxes on US consumers gradually, month by month. Remember past media reports on tariff policy have subsequently been denied over social media. This is a boiling frog approach—the price level effect is the same, but consumers may not notice so much. The risk is that repeated tariff increases would encourage repeated profit-led inflation episodes by providing a convenient cover story.

What does a combination of good economic data and higher rates mean for the markets? Following a strong December jobs report, and with yields continuing to climb higher, Jason reflects on recent market moves and reaffirms CIO’s longer-term market outlook. Plus, thoughts when it comes to portfolio positioning for the current environment. Featured is Jason Draho, Head of Asset Allocation Americas, UBS Chief Investment Office. Host: Daniel Cassidy

China’s December trade data showed even more strength in exports than had been anticipated. This is being attributed to US companies stockpiling ahead of threatened taxes from US President-elect Trump. Such stockpiling may delay the consumer price inflation effects of the taxes (though the narrative of the tax increase is powerful, and may lead to consumer price increases regardless).

We close out the first trading week of 2025 by reflecting on the December employment report, along with the minutes from the December FOMC meeting. Plus, a look at what to expect in the week ahead. Featured is Brian Rose, Senior Economist Americas, UBS Chief Investment Office. Host: Shiavon Chatman

US employment report Friday brings the regular reminder that average earnings are not wages (changing labor force structures change the average). The payrolls number is derived from a survey that has a 43% response rate, and that poor representation means significant revisions are much more likely. The market is looking for a fairly dull report overall—some moderation in job creation with a stable unemployment rate.

With a new year underway, Ainsley and Justin rejoin the conversation to explain what retirees, along with those preparing for retirement, should know in 2025. These considerations span social security and Medicare, to long-term care costs, estate planning, and more. Featured are Ainsley Carbone, Retirement Strategist, and Justin Waring, Senior Total Wealth Strategist, UBS Chief Investment Office. Host: Daniel Cassidy

The Federal Reserve meeting minutes reflect the rather chaotic swings of view that occur under Fed Chair Powell. After an emergency rate cut without an emergency in September, the Fed has moved to slowing the pace of rate cuts being “appropriate” in December. The basic idea is unchanged— follow inflation down. Concerns were raised about US President-elect Trump’s trade tax and deportation policies in discussions about inflation, but they were not the central focus of the inflation debate.

The minutes of the last Federal Reserve meeting are due. Investors’ concerns are less about the current state of play of the US economy (reasonable growth and slowing inflation) and more about where politics will take the economy next. This has added uncertainty about the 2025 policy path, and gives the minutes more importance than is perhaps normal at this stage of the cycle.

We kick-off 2025 by previewing President-elect Trump’s first 100 days in office, along with the legislative focuses and priorities of Congress in the months ahead. Plus, reflections on the life and legacy of late President Jimmy Carter. Featured is Shane Lieberman, Senior Governmental Affairs Advisors, Governmental Affairs US. Host: Daniel Cassidy

The resignation of Federal Reserve Vice-Chair Bar highlights the guardrails in protecting central bank independence. While Barr’s resignation from the supervision role might be politically inspired, Barr has not resigned as Fed governor. All seven gubernatorial positions are filled, and a vice-chair of the board of governors needs to be a member of the board of governors. The next term to end is Governor Kugler’s in 2026.

Our first episode of the year kicks off with an assessment of market activity over the past few weeks, and what to expect from markets over the near-term. We also spend time outlining expectations for Fed rate cuts in 2025, and with President-elect Trump’s inauguration only two weeks away, consider whether economic policies in Trump 2.0 will be more MAGA or DOGE. Featured is Jason Draho, Head of Asset Allocation Americas, UBS Chief Investment Office. Host: Daniel Cassidy

Will a cooling labor market reassure the Fed? Will stocks recover from the December dip? Can gold push closer to all-time highs? CIO's Christopher Swann brings you the latest on this week's market themes.

US President-elect Trump has been posting on social media in support of a single budget bill through Congress. A single bill might take longer to pass, delaying policy implementation. Trump advocated taxing US consumers of foreign goods to pay for an abolition of taxes on tips. (Tipping has been a hidden inflation force in the US, raising the cost of services without being recorded in inflation data).

US politics intrudes into financial markets, with the US House of Representatives trying to elect a speaker today. US Speaker Johnson has been endorsed by US President-elect Trump’s influential adviser Musk, and by Trump. However, the Republicans hold a very small majority (219 to 215), and one Republican has pledged to oppose Johnson. Investors’ focus will be on what this process suggests about the ease of passing legislation in the new administration.

2025 is the best of times, and the worst of times; an epoch of belief, an epoch of incredulity. In an increasingly polarized world, people will cling to one side or the other—without recognizing that both sides can have a point. It is an economist’s role to impartially assess the economic consequences of politics, in clear and direct language. The likely result is that I will upset everyone this year.

Listen to our final livestream of the year, where our Global Chief Investment Officer, Mark Haefele, and colleagues provide an in-depth recap of 2024, along with key insights and investment strategies for 2025 and beyond.

On the final episode of Top of the Morning for 2024, Brian Rose drops by to share his thoughts and reflections on this week’s FOMC meeting outcome. We also look ahead to 2025 and examine CIO’s current forecast for rate cuts, along with take a temperature on the health of the US economy as we head into the new year. Featured is Brian Rose, Senior Economist Americas, UBS Chief Investment Office. Host: Daniel Cassidy

With the wearisome repetitiveness of a tacky Christmas song, a US government shutdown is again threatened. A budget deal backed by president-elect adviser Musk and President-elect Trump failed to pass Congress. Absent a deal, the US government starts to shut down tonight. A short-lived shutdown affects government workers, but has limited economic impact. The longer a shutdown lasts, the more disruptive it is to the US economy. Economic data may not get published in a shutdown (a problem for Federal Reserve Chair Powell with their addiction to data dependency).

US inflation has fallen this year. A lot of this is due to the fantasy owners’ equivalent rent price, which no one pays. Declining fantasy prices do not help consumers’ spending power. However, rightly or wrongly (the answer is “wrongly”), Fed Chair Powell pays attention to inflation measures including OER. If rates were raised on a fantasy, they should be cut on a fantasy—and we see a rate cut today.

For the final episode of 2024, Shane shares the latest on government funding negotiations, along with other year-end legislative priorities of Congress. We also touch on recent developments within Syria, along with highlight some notable priorities of Congress in the new year. Featured is Shane Lieberman, Senior Governmental Affairs Advisors, Governmental Affairs US. Host: Daniel Cassidy

US inflation has fallen this year. A lot of this is due to the fantasy owners’ equivalent rent price, which no one pays. Declining fantasy prices do not help consumers’ spending power. However, rightly or wrongly (the answer is “wrongly”), Fed Chair Powell pays attention to inflation measures including OER. If rates were raised on a fantasy, they should be cut on a fantasy—and we see a rate cut today.

Torsten rejoins Jason in the New York podcast studio to exchange 2024 reflections, and 2025 expectations - spanning market returns, monetary policy, and the macro environment for the US, and around the world. We also spend time addressing investment themes, and allocation preferences as we head into a new year. Featured are Jason Draho, Head of Asset Allocation Americas, UBS Chief Investment Office, and Torsten Slok, Partner and Chief Economist with Apollo Global Management. Host: Daniel Cassidy

We wrap up our year-ahead series with a look at expectations for the municipal bond market in 2025, including how policy uncertainties and macro factors might impact munis, along with how investors should assess key trends and position within the asset class. Featured are Sudip Mukherjee, Senior Municipal Strategist Americas, Ted Galgano, Senior Municipal Credit Strategist Americas, & Jeannine Lennon, Senior Municipal Credit Strategist, UBS Chief Investment Office. Host: Daniel Cassidy

While we wait for the perfection of economists running everything, politicians are creating background noise. To the surprise of absolutely no one, Germany’s government lost a vote of confidence and February elections are now likely. Expect deep soul-searching about relatively insignificant changes in fiscal deficits.

As we conclude the CIO Strategy Snapshot series for 2024, Jason unveils and explains his choice for 2024 “finance word of the year”. We also spend time reflecting the latest round of inflation data, previewing this week’s FOMC meeting, and reviewing CIO’s investment recommendations heading into 2025. The CIO Strategy Snapshot will resume on Monday, January 6. Featured is Jason Draho, Head of Asset Allocation Americas, UBS Chief Investment Office. Host: Daniel Cassidy

China’s November retail sales disappointed. Some of this can be blamed on the timing of the singles shopping festival. The pattern of sales showed consumers spending in areas with government support, but in doing so cut back on areas without government support. This demand switching in an overall subdued demand environment has parallels to Japan’s “spending voucher” initiatives in the 1990s. The data keeps up pressure for fiscal policy to tackle consumers’ apprehensions about the future.

The decade so far has been a “Roaring ‘20s” by many measures. Now we’re getting set to navigate geopolitical uncertainty, lower interest rates, and transformative innovation in the years ahead. As we approach the midpoint of the decade, a key question is whether US political change might extend or end this “Roaring ‘20s” dynamic. To help you start the new year with confidence, Jason Draho, Head of Asset Allocation, and Kurt Reiman, Head of Fixed Income, will outline top ideas for 2025, share key investment insights, and provide strategies for achieving long-term investment success. Recorded on December 5th.

Our conversation outlines the current landscape for fixed income investors as we approach 2025, and where to locate opportunity within the asset class. We also touch on monetary policy, rates and the macro environment. Featured are Kewjin “Kew” Yuoh, Partner, Portfolio Manager with Lord Abbett, and Leslie Falconio, Head of Taxable Fixed Income Strategy Americas with the UBS Chief Investment Office. Host: Daniel Cassidy

Our series of year-ahead conversations continue with a look at performance expectations and themes in focus (including Artificial Intelligence) for the US Information Technology sector in 2025. We also spend time reviewing sub-sector preferences, along with reflect on sector performance over the past year. Featured is Kevin Dennean, Technology & Telecom Analyst Americas, UBS Chief Investment Office. Host: Daniel Cassidy

The ECB cut rates by 25bps as was expected. The ECB does not want to be running a restrictive monetary policy at the moment, and more rate cuts are expected next year. The ECB’s challenge is that data tends to understate economic activity, so knowing precisely how the economy is faring is difficult.

On the final episode of Viewpoints for 2024, Burkhard reflects on what has been a busy year, spanning market and macro developments, along with shares expectations for 2025.

As 2024 comes to a close, the CIO Fixed Income team reflects on performance across sub-sectors (including Municipals, Investment Grade, and Preferreds), and share expectations for the year-ahead. Plus, thoughts on positioning across the broader asset class. Featured are Leslie Falconio, Head of Taxable Fixed Income Strategy Americas, Sudip Mukherjee, Senior Municipal Strategist Americas, along with Senior Fixed Income Strategists’ Barry McAlinden and Frank Sileo, from the UBS Chief Investment Office.

Our series of year-ahead conversations continue with a look at performance expectations and themes in focus for the US healthcare sector in 2025. We also spend time reviewing sub-sector preferences, along with reflect on sector performance over the past year. Featured is Eric Potoker, Healthcare Analyst Americas, UBS Chief Investment Office. Host: Daniel Cassidy

US consumer price inflation data is due for November. These numbers are something of a mess. A quarter of the index is a fantasy price no one pays. Income inequality means the average price is less representative of most US households’ experience. The threat of taxes on US consumers from the next administration means this inflation data is not necessarily a good guide to 2025 trends.

In this special edition of the CEO Macro Briefing Book series, Paul Hsiao outlines some of the top questions on the minds of business owner clients as we head into 2025. Featured is Paul Hsiao, Asset Allocation Strategist Americas, UBS Chief Investment Office. Host: Daniel Cassidy

China’s consumers have been unenthusiastic, and exports are not necessarily dependable. Yesterday, China’s politburo signaled additional monetary and fiscal stimulus would be forthcoming. If US President-elect Trump taxes US consumers of goods from China, that may be a convenient excuse for China to cut taxes for its consumers.

Despite the emergence of growing global political risks in recent days and weeks, markets and investors appear to be unfazed - Jason offers thoughts as to why that’s the case. We also reflect on the November employment report, and what the state of the US labor market today might mean for monetary policy near-term. Plus, a look at CIO’s current market outlook and positioning views. Featured is Jason Draho, Head of Asset Allocation Americas, UBS Chief Investment Office. Host: Daniel Cassidy

US President-elect Trump gave a wide ranging interview, touching on several points that matter to investors. Trump seemed to acknowledge the independence of the Federal Reserve (the chair cannot be dismissed on presidential whim). This will reassure markets. Investors may, however, be concerned by the determination to deport migrants established in the US economy.

As we close out another trading week, Mike Gourd drops by to recap the latest employment data, along with the remarks from several Fed officials this past week, including those of Chairman Jerome Powell. Plus, a look at what investors should expect in the week ahead. Featured is Mike Gourd, Asset Allocation Strategist Americas, UBS Chief Investment Office. Host: Shiavon Chatman

US employment report Friday looms, when markets get excited about what an unreliable survey tells us about the economic outlook. The aftermath of strikes and hurricanes adds a lot of uncertainty to this report, and there is not really a consensus expectation for employment growth—just a wide range of random expectations. The forward guidance of this report is also diminished. Whatever the trends in employment, US President-elect Trump is proposing policies that might mark a structural break in employment conditions (most obviously deportations and tariffs).

In this episode, Shane updates on several key legislative priorities of Congress before year-end, including a government funding bill, a Farm bill, and the National Defense Authorization Act. We also take inventory of President-elect Trump’s cabinet nominees, and the prospects for confirmations in early 2025. Featured is Shane Lieberman, Senior Government Affairs Advisor, Governmental Affairs US. Host: Daniel Cassidy