UBS On-Air: Market Moves

Events in the Middle East have moved swiftly, shifting markets from fears of escalation to cautious optimism following the announcement of a ceasefire. Yet uncertainty persists: Will the ceasefire hold, or are we entering a period of uneasy coexistence? Chief Economist Paul Donovan joins hosts Christopher Swann and Belinda Peeters to examine the global economic outlook after the end of US-Israeli strikes on Iran. What are the implications for energy prices, central bank policy, and markets - and what strategies can help investors navigate the next stage of developments in the region?

US March consumer price inflation gives insight into US consumers’ war burden (albeit with some data accuracy concerns). Affordability is one investor concern. Affordability issues rely on inflation perception, driven by prices of high frequency purchases like food and fuel. Affordability is a political issue—the worse the crisis, the more likely the administration attempts policies to resolve, or distract.

In economic terms, the Gulf ceasefire has not held. Iran has closed the Strait of Hormuz in response to significant Israeli strikes against Lebanon. The optimistic bias in markets means that only some of yesterday’s risk market gains have been surrendered. The demonstration of relative power in the Gulf is relevant when considering long term risk premia around global supply chains.

In the wake of the U.S., Israel, and Iran agreeing to a two-week ceasefire, Kurt Reiman, Head of Fixed Income Americas, and Shane Lieberman, Senior Governmental Affairs Advisor, drop by for a timely discussion on whether this development could presage a sustainable end to the conflict, the unresolved issues to be mindful of, and how to position portfolios during times of geopolitically driven uncertainly. Plus, an early look at U.S. midterm election polling, and what certain outcome scenarios in November could mean for the markets. Host: Daniel Cassidy

Throughout the war, markets have been inclined to see the oil barrel as half full rather than half empty. Thus, markets are inclined to view the ceasefire as a definite end to the conflict. Iran’s low level of trust in the US administration’s commitment to agreements means examining the motives for the shift is important.