UBS On-Air: Market Moves

Frank drops by for a performance update and outlook for the preferreds market, including a look at positioning considerations and recommendations, and what to be mindful of when it comes to the interest rate environment. Featured is Frank Sileo, Senior Fixed Income Strategist Americas, UBS Chief Investment Office. Host: Daniel Cassidy

US President Trump had declared the Strait of Hormuz open for free. Now Trump has declared it open for a 20% fee. Shipping data suggests there was less-than-universal belief in free safe passage through Hormuz on Monday. It is unlikely ships will go full steam ahead to take the same risks while paying a high tax. A 20% fee would be about 15 times the mooted Iranian charge, and (as a proportionate tax) would exaggerate future oil price moves.

Jason rejoins to weigh in on recent market activity and drivers, spanning geopolitics, to the Fed, to macro data. Plus, thoughts on this week’s key inflation data, Congressional testimony from Fed Chair Kevin Warsh, the beginning of the Q2 corporate earnings season, and more. We end with guidance around portfolio positioning in consideration of all these factors. Featured is Jason Draho, Head of Asset Allocation Americas, UBS Chief Investment Office. Host: Daniel Cassidy

Jason and Jordan discuss how markets continue to look past geopolitical tensions, with investors viewing Iran-related volatility as manageable and unlikely to derail the broader outlook. They also discuss earnings season, where strong expected profit growth could validate elevated stock prices.

The US declared the Strait of Hormuz open. Iran declared the Strait of Hormuz closed. Investors have responded with a muted reaction. Oil prices are up, but not in an economically meaningful way. Shipping traffic volumes seem to give more credibility to the Iranian version, but investors’ optimism bias remains. There is an assumption that the political pain of gasoline prices in the US (which have risen again recently) will justify expectations that the current situation will be resolved.