UBS On-Air: Market Moves

The US and Iran have been trading missile exchanges in the Gulf, pushing oil back over USD 90 per barrel. US President Trump posted a AI-generated video of Kharg Island being destroyed, but there appears to have been no attack in the Iranian facility and the muted nature of the hostilities has created a muted market response.

Advances in AI are beginning to move beyond digital tasks and into physical AI, raising the question of where value could accrue as machines become more adaptable in real-world environments. This episode explores how faster on-the-job learning could reshape automation, the hardware required to support it, and the investment implications across the emerging robotics supply chain.

Amidst the toasting of marshmallows at the Jackson Hole summer camp for economists, there are some hopes Federal Reserve Chair Warsh will offer a sensible structure for thinking about US monetary policy. Warsh’s communication style, telling investors “you figure it out”, is not working, creating uncertainty and introducing an unnecessary risk premium into financial markets.

AI data-center development is unlikely to stop, but the rules of engagement are changing. Local opposition, ratepayer concerns, and permitting scrutiny are shifting the debate from whether projects should be built to how costs, benefits, and community impacts should be allocated. Hear insights from Kurt Reiman, Head of Fixed Income Americas, Barry McAlinden, Fixed Income Strategist Americas, Jeannine Lennon, Municipal Strategist Americas, Jay Dobson, US Energy & Utilities Equity Strategist, and Nathaniel Gabriel, Materials & Industrials Equity Strategist: Host: Daniel Cassidy

The Iranian Revolutionary Guard reported that Iran and Oman have agreed to share revenues from tolls on shipping passing through the Strait of Hormuz—once the strait reopens. The announcement stresses that Iran is likely to keep stricter control over the strait after the war, but investors expect that. The announcement does not, of itself, suggest an imminent reopening of the strait.

Higher interest rates and government finances have been in the spotlight over the past week, with investor attention focused on possible policy responses this week and beyond. Financial markets have been struck by these developments, though have remained resilient as the summer nears an end. Jason Draho, Head of Asset Allocation Americas from the UBS Chief Investment Office, reflects on these developments and shares guidance around portfolio positioning. Host: Daniel Cassidy

Iran and Oman are close to agreeing on a shipping route through the Strait of Hormuz. While this may not signal an immediate reopening of the strait, it does suggest Iran is considering reopening the strait. Crude oil prices have fallen (although gasoline prices in the US remain comfortably over USD 4 per US gallon).

This special edition of the CEO Macro Briefing Book presentation series outlines how businesses are embracing AI adoption, the implications of AI usage to operating efficiency, the evolving regulatory and political landscape surrounding AI heading into the US midterm elections, along with the factors behind the recent decline in token price. Featured is Paul Hsiao, Senior Asset Allocation Strategist Americas, UBS Chief Investment Office. Host: Daniel Cassidy

The US affordability crisis stays in the headlines, with US President Trump suggesting a doubling of tariffs paid by US importers of Canadian cars. However, these tariffs would not take effect until 1 January and investors are likely to assume the US will retreat (this has been the pattern with similar threats).

The collapse of trade talks between Canada and the US resulted in US importers being charged tariffs on a further USD 20bn of imports. Import prices (where the tariff is levied) typically represent about 40% of the end-consumer price. These tariffs will be harder than others to avoid. China seems to have helped its US customers avoid or reduce tariffs by rerouting goods—that is not economically practical for Canada.

Jackson Hole puts the Federal Reserve’s policy trade-off into focus: a rate-sensitive housing market is under pressure, while AI investment remains exceptionally strong. This episode explores how AI-led growth may complicate inflation signals, and what that could mean for the policy outlook.

Join David Lefkowitz, Head of Equities Americas, each month for a look at the factors that are driving performance across US equities. We also cover risk considerations, thematic focuses, and positioning recommendations from the UBS Chief Investment Office (as outlined within the latest UBS House View). This month, David outlines the factors behind CIO’s S&P 500 price target increases, why the rollout of AI remains a key positive for the market, the implications of rising longer-term interest rates, risk factors such as inflation and the over-building of data centers, and more. Host: Daniel Cassidy

US Treasury Secretary Bessent declared the proposed Treasury buybacks could be four billion dollars. Bond investors seem to feel that four billion dollars is not terribly impressive. Yields rose—though a sense of proportion is helpful. This is hardly a repeat of the 1994 bond market collapse. What matters is whether the bond weakness has attracted US President Trump’s attention, triggering a policy response.

Matt drops by UBS Studios in New York to rejoin Jason for a wide-ranging conversation which spans the US macroeconomic environment, equity market performance, the AI capex cycle, Fed monetary policy, and market risk considerations. Plus, and exchange of views on portfolio positioning. Matt McLennan is Head of the Global Value Team, and a portfolio manager at First Eagle Investments, and is a member of the UBS Research Advisory Board. Jason Draho is Head of Asset Allocation Americas with the UBS Chief Investment Office. Host: Edwin Marrero

The announcement that the US Treasury would “at least double” purchases of long-term US government bonds sparked a rally; 10-year yields fell to levels not seen for a whole week. Higher yields impact the US affordability crisis and debt service costs, making them a political focus. This policy is to counter the (presumably unintended) consequences for bond markets of other policies like the Gulf war and tariffs.

Tensions in the Gulf continue, and crude oil futures remain over USD 90 per barrel. This has reignited some inflation concerns. The fact that consumers have shifted spending patterns in response to higher oil prices is not properly reflected in inflation calculations—and while the impact will not be dramatic, it does mean that the damage to real incomes is slightly less than inflation data suggests.

This month’s episode focuses on investing through a social lens, bringing together experts from UBS Global Wealth Management and Community Capital Management. Community Capital Management specializes in fixed income investments that aim to advance positive societal outcomes and have been committed to this work since its founding in 1998. Featured are Melissa Amler and Tiffany Agard from the Sustainable & Impact Investing team at UBS Global Wealth Management, along with David Sand, Co-Chief Impact Strategist at Community Capital Management.

The Brent benchmark oil future is back above USD 90 per barrel. The US-Iran truce covered by the “memorandum of understanding” expired yesterday and US President Trump said there is no intention to extend it. Trump also threatened to bomb Oman (again). From an investor perspective, none of this changes the current situation—Iran keeps the Strait of Hormuz effectively closed—but markets’ optimism bias is undermined by the near-term outlook.

We are in the home stretch of peak summer vacation season and that has translated to a calm in the markets. Economic data, however, continues to roll in with potential implications for the course of Fed monetary policy. Jason Draho, Head of Asset Allocation Americas from the UBS Chief Investment Office, discusses these implications, along with current investor sentiment and portfolio positioning. Host: Daniel Cassidy

Japan’s preliminary second-quarter GDP data was weaker than expected—though the headline changes were exaggerated by the fiction of annualization. Consumer spending weighed on the growth rate. While international investors have been eager to see the Bank of Japan as being too late with rate increases, the data seems to support a more gradual approach.

AI is blurring the lines between asset classes, creating correlated exposures where portfolios may appear diversified on the surface. This episode considers the limits of asset-class diversification and explores how a more dynamic, scenario-based approach can offer a clearer view of portfolio risk and help investors build more resilient portfolios.

Rich rejoins for a wide-ranging conversation with Jason that covers equity valuations, Q2 earnings reflections, Fed monetary policy, the US macroeconomic environment, and more. Plus, thoughts on portfolio positioning through year-end. Featured are Jason Draho, Head of Asset Allocation Americas with the UBS Chief Investment Office, and Richard Bernstein, Global Head of Macro and Customized Investing at Janus Henderson Investors. Host: Daniel Cassidy

July US producer price data did nothing to change economists’ outlook for the Federal Reserve. Lettuce prices collapsed 72% from the previous month—this follows a health scare and a demand drop, and is unlikely to be touted as an example of disinflation by the administration.

Following another busy week of corporate earnings releases and equities reaching all-time-highs, Burkhard weighs equity valuations, whether the data-center boom is sustainable, the longevity of productivity momentum, along with where the global race for AI dominance stands today.

The July US consumer price inflation data was as expected. This allowed headline writers to wax lyrical about “easing pressures on the US Federal Reserve”. Economists are not rushing to change views—the economic consensus is very clearly for unchanged US rates this year. Non-oil price pressures still seem benign, but this print was flattered by fewer gasoline price increases that will be evident in the August data.

Eric Kazatzky is a Managing Director and Client Portfolio Manager at MacKay Shields (an affiliate of New York Life Investment Management). As we’re just past the mid-way point of the year, Eric outlines YTD muni market performance, and shares a year-end performance outlook. We cover the outperformance of Revenue Bonds, whether opportunity still exists in the 12-22-year portion of the yield curve, and how to think about High Yield munis in the second-half. Host: Daniel Cassidy

Today's US July consumer price inflation data will be less precise than in the past. There are more gaps in the data, and those gaps are filled by (educated) guesswork. Blunting consumer price precision will not impact markets however—investors are straining to second-guess what the Federal Reserve will do with policy. The reaction to a single weaker employment report shows the potency of any data release at the moment.

Dan and Sean drop by for a hedge fund performance update and outlook. We discuss the year-to-date evolution of risk and capital deployment, common themes observed in hedge fund books, along with strategies to consider in the current environment. Featured are Dan Scansaroli, Head of Global Investment Management Multi-Asset Solutions & Co-Head Investment Management Americas, & Sean Sanborn, Hedge Fund Strategist. Host: Daniel Cassidy

The crude oil price is creeping toward USD 90 per barrel. US President Trump responded to Iran’s demands for reparations by demanding Iran pay reparations—this is not the sort of concession the US will be required to make to reopen the Strait of Hormuz. It is too soon for the recent rise in crude oil to show up in US retail gasoline prices, so domestic political pressures have probably not yet peaked.

There are no signs of a summer slowdown for equity, bond, and forex markets as factors such as corporate earnings, economic data, AI developments, and policy news continue to drive notable market movement. Jason drops by to assess these market drivers, what it all means for the investment outlook, and shares CIO’s current investment recommendations. Featured is Jason Draho, Head of Asset Allocation Americas, UBS Chief Investment Office. Host: Daniel Cassidy

A wide-ranging conversation on the current rate environment, the road ahead for monetary policy, and the landscape for broader fixed income investing. Featured are Phoebe White, Head of US Rates Strategy at UBS Group Research, and Leslie Falconio, Head of Taxable Fixed Income Strategy Americas with the UBS Chief Investment Office.

China’s July consumer and producer price inflation were lower than expected. China’s domestic prices have a weak relationship with export prices, and China's export prices have a weak relationship with global inflation. The price declines were attributed to energy and tourism services. However, this is another economy where inflation has been lower than consensus. Possibly the consensus is being distorted by the unusual experiences of 2022.

The scale of the AI buildout is extending its effects beyond the technology sector and equity markets to the broader economy. This episode explores what the investment surge could mean for productivity, growth, inflation, and interest rates, and how investors can balance exposure to AI beneficiaries with assets resilient to its broader macroeconomic effects.

China’s July export data was somewhat stronger than expected. The big three electrification exports have collectively been important to export growth. China’s exports to the US are steady around pre-pandemic levels (using China’s data, which is probably a better reflection of trade trends). German June exports were stronger than expected and (of course) past data was revised stronger.

Today is the release of everything economists do not understand about the US economy—otherwise known as second quarter productivity. Productivity has assumed mythical status as people search for AI benefits. While technology should improve a company’s or sector’s productivity, its macro impact is less certain as people move into less productive jobs. Some productivity gains will not be counted—my robot lawnmower has substantially improved my productivity, but cutting my lawn was never part of GDP.

Michael Adelman and Matt Iannuci, along with Eileen Liu, Head of US Client Portfolio Management, join to discuss recent market developments within high yield bonds and broader credit markets.

As global equity markets set new all-time-highs and show signs of recovery from July indigestion, Burkhard outlines the factors that are driving current investor sentiment. We also cover the currency intervention by the US Fed and Bank of Japan. Plus, a market tie-in to Sysiphus, the hero of the ancient Greek-saga “A happy man”.

Oil prices are down and the optimism bias is up. There are hopes for an Iran-Oman settlement on post-war control of the Strait of Hormuz. This would probably mean tolls eventually (probably branded a “tariff” or an “environmental charge” according to political bias). A toll would be economically negligible. Iran cementing control of the Strait has implications for insurance, supply chain security, and Gulf infrastructure investment.

Doug Baker is a Portfolio Manager for Nuveen’s global fixed income team. Doug joins Frank Sileo, Senior Fixed Income Strategist Americas from the UBS Chief Investment Office, for a comprehensive discussion on the preferred securities market. They cover a performance update and outlook, risk considerations, positioning views, and more.

US Michigan consumer sentiment data is a weak economic signal. It does have political punch, via the inflation expectations measure. Consumers focus on the price of frequent purchases (food and fuel), and tend to fixate on the price level. Most consumers will have a “fair” price in mind as a reference, and for gasoline prices that is probably around USD 2.50 per US gallon. Gasoline remains well above that level—off its highs, but having risen recently.