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The economy is likely already in recession and is expected to contract again next year. Shortly after being sworn in as economy minister, Massa in August 2022 pledged to stop printing money to fight inflation. "Markets will likely prefer a Milei victory simply because he is more credible on delivering the fiscal adjustment." "Every investor understands that the macroeconomic adjustments that Argentina needs will inevitably translate into short-term pain." For investors, Argentine stocks traded in New York (.MIAR00000PUS) have been a beacon of hope, up near 15% year to date.
Persons: Sergio Massa, Javier Milei, Luis Robayo, Pilar Tavella, Alejo Czerwonko, Massa, Carlos de Sousa, UBS's, JPMorgan's Diego Celedon, Celedon, Rodrigo Campos, Adam Jourdan, Lisa Shumaker Organizations: por la Patria, La Libertad, University of Buenos, Law School, Global, Peronist, Barclays, Reuters Graphics Reuters, Argentina, Monetary Fund, Itau, IMF, Emerging, UBS Global Wealth Management, Vontobel Asset Management, Argentine, UBS, Thomson Locations: Argentina, University of Buenos Aires, Buenos Aires Argentina, New York, Argentine, outperforming
The prolonged period of high inflation may finally be coming to an end, according to an analysis of recent data by UBS global wealth management. In October, the consumer price index, a closely followed inflation gauge, increased 3.2% from 12 months earlier, down from 3.7% in September, the U.S. Bureau of Labor Statistics said Tuesday. The report marked a significant improvement on the pandemic-era peak of 9.1% in June 2022. “By next spring, inflation will have slowed to a comfortable level for both the Fed and investors,” said Solita Marcelli, chief investment officer of the Americas for UBS Wealth Management. “The strain on household budgets is real.”
Persons: , Solita Marcelli, Greg McBride Organizations: UBS, U.S . Bureau of Labor Statistics, Fed, Americas, UBS Wealth Management, Finance
[1/5] A trader reacts as a screen displays the Fed rate announcement on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., July 26, 2023. REUTERS/Brendan McDermid/File Photo Acquire Licensing RightsNEW YORK, Nov 14 (Reuters) - A benign U.S. inflation report is bolstering hopes that the Federal Reserve can bring down consumer prices without hurting the economy, a so-called Goldilocks environment that investors believe will benefit stocks and bonds. This does feel like a Goldilocks moment for the entire market.”The data fueled a powerful rally in stocks and bonds. The S&P 500 (.SPX) was up about 2% on the day, on track for its biggest one-day rise since January. Still, some investors believed it was too early to call a victory in the fight against inflation.
Persons: Brendan McDermid, Eric Kuby, bearish, , Daniel Kirsch, Piper Sandler, Thomas Hayes, , Brian Rose, Jamie Cox, Lewis Krauskopf, Saqib Iqbal Ahmed, Davide Barbuscia, Ankika Biswas, Ira Iosebashvili, Nick Zieminski Organizations: New York Stock Exchange, REUTERS, Federal Reserve, North Star Investment Management Corp, Thomson Reuters, BofA's Global, Fed, Fund, UBS Global Wealth Management, Harris Financial, Thomson Locations: New York City, U.S, Thomson Reuters United States, New York, Bengaluru
Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via EmailThe Fed has overtightened, says UBS Global Wealth Management's Paul DonovanPaul Donovan, chief economist at UBS Global Wealth Management and CNBC's Steve Liesman join 'The Exchange' to discuss the latest CPI report, the outlook for rate hikes, and more.
Persons: UBS Global Wealth Management's Paul Donovan Paul Donovan, Steve Liesman Organizations: UBS Global Wealth, UBS Global Wealth Management
UBS shares climbed on Tuesday morning after the Swiss banking giant resoundingly beat expectations for underlying profit. The bank recorded an underlying operating profit before tax of $844 million, well ahead of consensus expectations. Credit Suisse Wealth Management generated positive net new money inflows for the first time since the first quarter of 2022, contributing to inflows of $22 billion for UBS Global Wealth Management. Our clients have continued to place their trust and confidence in us, contributing to strong inflows across wealth management and our Swiss franchise," CEO Sergio Ermotti said in a statement. This is then slightly offset by heavier provisions," they noted, adding that the acceleration of Wealth Management net new money inflows in September was also "encouraging."
Persons: Sergio Ermotti Organizations: UBS, Credit Suisse, Reuters, Credit Suisse Wealth Management, UBS Global Wealth Management, Group, Swiss, Citi, Management Locations: Swiss
The relationship between stocks and bonds has been a tight one in recent months, with equities falling as Treasury yields climbed to 16-year highs. Higher yields offer investment competition to stocks while also raising the cost of capital for companies and households. Meanwhile, the S&P 500 has surged nearly 6% from its October lows. Draho expects the S&P 500 to trade between 4,200 and 4,600 until investors determine whether the economy will be able to avoid a recession. The S&P 500 was recently up more than 1% on the day.
Persons: Brendan McDermid, Jason Draho, Draho, Ryan Detrick, Greg Wilensky, Janus Henderson, David Randall, Ira Iosebashvili, Louise Heavens Organizations: New York Stock Exchange, REUTERS, Federal Reserve, Treasury, UBS Global Wealth Management, National Association of Active Investment, CFRA Research, Carson Investment Research, Fed, Apple Inc, Janus, Janus Henderson Investors, Thomson Locations: New York City, U.S, Treasuries
The S&P 500 is down 7% since the start of September and briefly entered correction territory from its summer high last week. However, strategists say these threats are mostly priced into stocks, but higher earnings aren't. After three straight quarters of contracting profits, both BofA and UBS expect earnings to grow at least 3% year-over-year in Q3. "Within the context of our expectations for a continued choppy backdrop, we are incrementally more positive," Lerner wrote in a late October note. Truist's more constructive view on equities is based on strong results so far in Q3, Lerner wrote.
Persons: Oppenheimer, Savita Subramanian, Marcelli, David Lefkowitz, Lefkowitz, John Stoltzfus, Stoltzfus, Keith Lerner, Lerner, it's, Truist, Mark Haefele Organizations: Bank of America, UBS, Bank of America's, Equity, UBS Global Wealth Management, Federal Reserve, Israel, Oppenheimer Asset Management Locations: Israel, Ukraine, Truist, Real, Charlotte
Investors have grown more worried about a widening conflict in recent days after the U.S. dispatched more military assets to the Middle East while Israel attacked targets in Gaza and Hamas supporters in Lebanon and Syria. Some investors also expect a widening conflict could prompt safe-haven buying of Treasuries. "However, an escalation of the conflict would likely shift attention away from monetary policy concerns and boost safe-haven demand for Treasuries." The Cboe Volatility index (.VIX) has climbed in the wake of the conflict and rose on Friday, approaching seven-month highs. The Federal Reserve is set to give its latest monetary policy statement on Wednesday, while Apple's quarterly results highlights another busy week of corporate reports.
Persons: Dado Ruvic, , Randy Frederick, Charles Schwab, Brent, Peter Cardillo, Lewis Krauskopf, David Randall, Ira Iosebashvili, David Gregorio Our Organizations: REUTERS, Federal, Hamas, Investors, U.S, Capital Economics, Spartan Capital Securities, UBS Global Wealth Management, Thomson Locations: Gaza, East, Israel, Lebanon, Syria, Treasuries, U.S
This year’s climb in Treasury yields is changing that calculus, as government bonds offer income that is viewed as risk-free to investors who hold them to term. The 10-year Treasury yield has climbed about a full percentage point since then. The term premium is the added compensation investors expect for owning longer-term debt and is measured using financial models. Stocks have averaged a forward price-to-earnings ratio of 17.8 over the last 10 years, while the term premium has averaged -0.3%. That compares with a historical average forward P/E of 15.6 and a term premium of 1.4% since 1985.
Persons: Brendan McDermid, , Quincy Krosby, Elon Musk, John Lynch, Lynch, LSEG, Matthew Miskin, Keith Lerner, ” Lerner, Lewis Krauskopf, Dan Burns, Ira Iosebashvili, Marguerita Choy Organizations: New York Stock Exchange, REUTERS, Soaring U.S, Treasury, U.S . Federal Reserve, . Treasury, BofA Global Research, LPL, Comerica Wealth Management, Reuters Graphics, John Hancock Investment Management, UBS Global Wealth Management, Advisory, Thomson Locations: New York City, U.S
A Wall Street sign is pictured outside the New York Stock Exchange in New York, October 28, 2013. Wall Street’s most closely-watched measure of investor nervousness, the Cboe Volatility Index (.VIX), on Friday hit its highest in nearly seven months, as the S&P 500 slid for the week. That has left investors piling into other traditional safe-haven assets such as the dollar and gold, as well as short-term debt. Rising bond yields have dampened risk appetite, raising the cost of capital for companies and offering investment competition to stocks. Geopolitical uncertainties, climbing bond yields and the risk of more losses in stocks means "investors face fresh uncertainties," they wrote.
Persons: Carlo Allegri, Angelo Kourkafas, Edward Jones, , Jerome Powell, Brent Kochuba, , Rick Meckler, Lewis Krauskopf, Saqib Iqbal Ahmed, Ira Iosebashvili, David Gregorio Our Organizations: New York Stock Exchange, REUTERS, Equity, Treasury, Reuters Graphics, Federal, Microsoft, UBS Global Wealth Management, Swiss, Cherry Lane Investments, UBS, Brent, Thomson Locations: New York, Israel, Cherry Lane Investments .
Still, some traders interpreted his comments as an endorsement of keeping rates around current levels through most of next year. Yields on the benchmark 10-year Treasury, which move inversely to bond prices, rose briefly to 5% late on Thursday, a closely watched level not seen since 2007. “That gives people the go ahead to take rates above 5%.”Whiteley said that he sees 10-year yields moving as high as 5.5% before peaking. An extended climb in Treasury yields risks exacerbating the pressures that have dogged a broad array of assets in recent months. Still, even if the Fed cuts rates over the next few years, yields could stay above 5% if inflation and growth remain high, he said.
Persons: Jerome Powell, Brendan McDermid, Stocks, ’ ”, Greg Whiteley, ” Whiteley, , Gennadiy Goldberg, ” Goldberg, Powell, Sameer Samana, Alan Rechtschaffen, Rechtschaffen, Robert Tipp, Organizations: YORK, Treasury, Federal Reserve, Federal, Economic, of New, REUTERS, New York Economic, Fed, TD Securities, Wells, Investment Institute, UBS Global Wealth Management, Tipp Locations: of New York, New York City, U.S, DoubleLine
Watch CNBC's full interview with UBS's Paul Donovan
  + stars: | 2023-10-20 | by ( ) www.cnbc.com   time to read: 1 min
Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via EmailWatch CNBC's full interview with UBS's Paul DonovanPaul Donovan, chief economist at UBS Global Wealth Management , joins 'The Exchange' to discuss variable rate mortgages pushing up the CPI, the effort to exclude asset prices in the CPI, and the direction of inflation trending downwards.
Persons: UBS's Paul Donovan Paul Donovan Organizations: UBS Global Wealth Management, CPI
Still, some traders interpreted his comments as an endorsement of keeping rates around current levels through most of next year. Yields on the benchmark 10-year Treasury, which move inversely to bond prices, rose briefly to 5% late on Thursday, a closely watched level not seen since 2007. "That gives people the go ahead to take rates above 5%.”Whiteley said that he sees 10-year yields moving as high as 5.5% before peaking. An extended climb in Treasury yields risks exacerbating the pressures that have dogged a broad array of assets in recent months. Still, even if the Fed cuts rates over the next few years, yields could stay above 5% if inflation and growth remain high, he said.
Persons: Jerome Powell, Brendan McDermid, Stocks, , Greg Whiteley, ” Whiteley, Gennadiy Goldberg, Goldberg, Powell, Sameer Samana, Alan Rechtschaffen, Rechtschaffen, Robert Tipp, Davide Barbuscia, David Randall, Saqib Iqbal Ahmed, Ira Iosebashvili, Megan Davies Organizations: Economic, of New, REUTERS, Treasury, Federal Reserve, New York Economic, Fed, TD Securities, Wells, Investment Institute, UBS Global Wealth Management, Tipp, Thomson Locations: of New York, New York City, U.S, DoubleLine
Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via EmailOwners equivalent rent is distorting inflation data, says UBS's Paul DonovanPaul Donovan, chief economist at UBS Global Wealth Management , joins 'The Exchange' to discuss variable rate mortgages pushing up the CPI, the effort to exclude asset prices in the CPI, and the direction of inflation trending downwards.
Persons: UBS's Paul Donovan Paul Donovan Organizations: UBS Global Wealth Management, CPI
Felipe Villarroel, portfolio manager at TwentyFour Asset Management, said he recently swapped some 10-year Treasuries for higher yielding 30-year Treasuries. At these levels, yields give “a massive cushion in your total returns" to protect against bond prices falling further, he said. Yields on the benchmark 10-year U.S. Treasury were over 4.95% in Asia trade on Thursday, their highest level in more than 16 years, and 30-year yields breached 5% this month for the first time since 2007. An auction of 30-year U.S. Treasuries showed weak demand last week, sending yields higher. "The tightness that (bond yields) are imposing on the economy and markets is rising ... this caps the extra work the Fed needs to do," said Smith.
Persons: Jerome Powell, David Rubenstein, Amanda Andrade, Rhoades, Felipe Villarroel, Treasuries, Matt Smith, Ruffer, Buyers, Leslie Falconio, Ruffer's Smith, Smith, Davide Barbuscia, Michelle Price, Ira Iosebashvili, Nick Zieminski Organizations: Federal, Economic, of Washington, Washington , D.C, REUTERS, Treasuries, TwentyFour Asset Management, Bank of America Global Research, Treasury, UBS Global Wealth Management, BlackRock Investment Institute, Thomson Locations: Washington ,, Asia
Felipe Villarroel, portfolio manager at TwentyFour Asset Management, said he recently swapped some 10-year Treasuries for higher yielding 30-year Treasuries. At these levels, yields give “a massive cushion in your total returns" to protect against bond prices falling further, he said. Yields on the benchmark 10-year U.S. Treasury were over 4.95% in Asia trade on Thursday, their highest level in more than 16 years, and 30-year yields breached 5% this month for the first time since 2007. An auction of 30-year U.S. Treasuries showed weak demand last week, sending yields higher. "The tightness that (bond yields) are imposing on the economy and markets is rising ... this caps the extra work the Fed needs to do," said Smith.
Persons: Jerome Powell, David Rubenstein, Amanda Andrade, Rhoades, Felipe Villarroel, Treasuries, Matt Smith, Ruffer, Buyers, Leslie Falconio, Ruffer's Smith, Smith, Davide Barbuscia, Michelle Price, Ira Iosebashvili, Nick Zieminski Organizations: Federal, Economic, of Washington, Washington , D.C, REUTERS, Treasuries, TwentyFour Asset Management, Bank of America Global Research, Treasury, UBS Global Wealth Management, BlackRock Investment Institute, Thomson Locations: Washington ,, Asia
Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via EmailChina's property sector will continue to be a drag on the economy, UBS saysYifan Hu, regional chief investment officer at UBS Global Wealth Management, discusses the outlook for the country's property sector.
Persons: Yifan Hu Organizations: UBS, UBS Global Wealth Management
The 10-year yield on Thursday afternoon stood at about 4.7%, some 18 basis points from the 16-year highs touched last week. “Every time the Fed pauses, yields come down, but the market is not convinced they’re quite there yet." There's plenty of evidence that financial conditions, which reflect the availability of credit in the economy, have tightened in recent months. Credit market spreads have widened as investors demand a higher yield on riskier assets, such as corporate bonds. Fed funds futures show investors pricing in a roughly 15% chance of the central bank's raising rates next month, from around 27% last week.
Persons: Dado Ruvic, , Leslie Falconio, they’re, Philip Jefferson, Lorie Logan, Mark Dowding, Goldman Sachs, Edward Al, Hussainy, Neuberger Berman, Jonathan Cohn, Davide Barbuscia, Ira Iosebashvili, Megan Davies, Leslie Adler Organizations: REUTERS, Federal, . Treasury, UBS Global Wealth Management, Reuters Graphics, Dallas Fed, RBC Global Asset Management, Reuters, Treasury, Columbia, Nasdaq, Nomura Securities International, Thomson
Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., September 11, 2023. ET is expected to show the producer price index for final demand increased 0.3% last month after a 0.7% rise in August, ahead of Thursday's closely watched consumer inflation data. Yields on government bonds have eased from their multi-year highs on dovish remarks from Fed officials earlier this week. Central bank officials such as Fed Governor Christopher Waller, Atlanta Fed President Raphael Bostic and Boston Fed President Susan Collins are also scheduled to speak on Wednesday. Exxon Mobil (XOM.N) lost 1.7% as the oil and gas producer is set to buy shale producer Pioneer Natural Resources (PXD.N) in an all-stock deal valued at $59.5 billion.
Persons: Brendan McDermid, Fed's Bowman, Michelle Bowman, Christopher Waller, Raphael Bostic, Susan Collins, Mark Haefele, Birkenstock, Tim Wentworth, Piper Sandler, Drugmaker Eli Lilly, LLY.N, Novo, Shashwat Chauhan, Ankika Biswas, Arun Koyyur, Shounak Organizations: New York Stock Exchange, REUTERS, Companies, Fed's Bowman Exxon, Futures, Dow, Nasdaq, Treasury, Federal, Labor Department, Atlanta Fed, Boston Fed, UBS Global Wealth Management, Traders, Microsoft, Nvidia, Palestinian, Hamas, Dow e, Walgreens Boots Alliance, Arista Networks, Exxon Mobil, Natural Resources, Novo Nordisk's, Baxter International, Thomson Locations: New York City, U.S, Gaza, Thursday's, Middle East, Israel, Bengaluru
Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via EmailEvents in the Middle East won't have a 'major negative impact' on global markets, UBS saysKelvin Tay, regional chief investment officer of UBS Global Wealth Management, says the Russia-Ukraine war was "much bigger" for global markets, but they "are a lot higher than where they were prior to the outbreak of the conflict."
Persons: Kelvin Tay Organizations: UBS, UBS Global Wealth Management Locations: Russia, Ukraine
At the same time, climbing real yields make it more expensive to bet against the dollar. With real yields pushing higher, "only the bravest of traders are willing to bet against the greenback," he said. That, combined with a deceleration in inflation, has sent real yields soaring. The dollar has tracked real yields in recent years, with peaks and troughs closely aligned. Still, high real yields make him hesitant to short the U.S. currency.
Persons: Dado Ruvic, Karl Schamotta, Aaron Hurd, Hurd, Corpay's Schamotta, Saqib Iqbal Ahmed, Chuck Mikolajczak, Ira Iosebashvili, David Gregorio Our Organizations: REUTERS, U.S . Treasury Department, Futures Trading Commission, UBS Global Wealth Management, State Street Global Advisors, Thomson Locations: Toronto, U.S, Europe, China
Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., September 26, 2023. While the 30-year Treasury yield crossed above 5% for the first time since August 2007, the 10-year and five-year yields hit their highest since 2007. The CBOE volatility index (.VIX), Wall Street's "fear gauge", briefly hit a five-month high and topped its long-term average of 20. A day after U.S. job openings unexpectedly rose in August, investors will closely monitor September ADP National Employment data at 8:15 a.m. Reporting by Ankika Biswas and Shashwat Chauhan in Bengaluru; Editing by Shounak DasguptaOur Standards: The Thomson Reuters Trust Principles.
Persons: Brendan McDermid, Kevin McCarthy, Mark Haefele, Haefele, Austan Goolsbee, Michelle Bowman, Eli Lilly, LLY.N, Mike Mason, Ankika Biswas, Shashwat Chauhan, Shounak Dasgupta Organizations: New York Stock Exchange, REUTERS, Apple, U.S . House Republicans, Treasury, Microsoft, Nvidia, Dow e, Nasdaq, Federal, UBS Global Wealth, Institute, Supply, PMI, Chicago, Traders, Dow, Intel, Thomson Locations: New York City, U.S, Bengaluru
By contrast, both funds received their highest monthly net inflows of 2023 in June, gaining $265.5 million and $29.74 million, respectively, according to Lipper data. But AI stocks have suffered along with broader markets in recent weeks, as Treasury yields hovering around 16-year highs dull investors' risk appetite. Retail investor flows into the sector have also cooled as the initial fervor surrounding AI wanes. September saw the lowest net monthly retail flows of $1.96 billion into AI-linked stocks since April, according to Vanda Research. "It is possible this negative sentiment could reverse again in Q4, particularly if large cap tech stocks like Nvidia held in AI-themed tech ETFs continue to show strong earnings growth," CFRA's Ullal added.
Persons: Dado Ruvic, Aniket, Mark Haefele, Bansari Mayur, Ira Iosebashvili, Mark Potter Organizations: REUTERS, Robotics, Intelligence, Global Robotics, Automation, CFRA Research, Vanda Research, Global, Nvidia, UBS Global Wealth Management, Thomson, & $ Locations: Bengaluru
"It's not going to be a matter of struggling to get the inflation rate higher. While higher interest rates are good news for savers, businesses and consumers have become used to paying nothing for money over the past 15 years. Reuters GraphicsREADING YIELDSA market-based Fed model that breaks down the 10-year Treasury yield into its components provides further insight into investors' thinking. This rise in term premium, which spent much of the last decade below zero, reflects high levels of uncertainty about economic outlook and monetary policy, investors said. While the market appears to be confident in its belief in the end of the era of zero interest rates, it is far less so about the economy's actual likely path.
Persons: Sarah Silbiger, Greg Whiteley, It's, Neel Kashkari, Kashkari, Adrian, Crump, Emanuel Moench, John Velis, Leslie Falconio, BNY's Velis, Velis, Paritosh Bansal, Anna Driver 私 Organizations: Eccles Federal Reserve, Washington , D.C, REUTERS, Treasury, Federal Reserve, York Fed, Minneapolis, Moench, Frankfurt School of Finance, Management, Americas, BNY Mellon, UBS Global Wealth Management, San, San Francisco Fed Locations: Washington ,, U.S, DoubleLine, San Francisco
Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., August 15, 2023. "While the dot plots suggest upside risks to interest rates, we retain our expectations that the hike cycle is likely done and for the Fed not to raise rates again," Mark Haefele Chief Investment Officer, UBS Global Wealth Management, said in a note. Meanwhile, weak performance of recent listings after their debut highs has dampened hopes of a likely revival in the initial public offering market amid high interest rates and broader market declines. Arm Holdings also fell 3.0% to $51.3 premarket, nearing its IPO price of $51 per share while Instacart (CART.O) lost 1.4%. ET, Dow e-minis were down 188 points, or 0.54%, S&P 500 e-minis were down 34.75 points, or 0.78%, and Nasdaq 100 e-minis were down 160.75 points, or 1.06%.
Persons: Brendan McDermid, Mark, Ankika Biswas, Shristi, Arun Koyyur, Vinay Dwivedi Organizations: New York Stock Exchange, REUTERS, FedEx, Broadcom, Google, Dow, Nasdaq, Federal Reserve, Apple, Nvidia, Wall, UBS Global Wealth Management, Arm Holdings, Dow e, Marvell Technology, Marvell, Warner Bros Discovery, Paramount Global, Writers Guild of America, WGA, Thomson Locations: New York City, U.S, Bengaluru
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