UBS On-Air: Market Moves

A US policy restricting access to a cutting edge AI model led to a sudden shutdown for all users last week, raising questions about what AI regulation means for markets. This episode explores how concerns around misuse, including jailbreaking and cyberattacks, could impact model development, access, and competition across regions, and what this means for markets in the near term.

We discuss the factors that have led to a pronounced repricing of US interest rates, an outlook for monetary policy, and CIO’s current fixed income positioning recommendations. Plus, a look at the lending that is powering AI investment, and the implications to credit markets. Featured are Leslie Falconio, Head of Taxable Fixed Income Strategy Americas, and Barry McAlinden, Senior Fixed Income Strategist Americas, UBS Chief Investment Office. Host: Daniel Cassidy

Shane drops by to update on the latest surrounding a potential deal signing over the weekend to end the US-Iran conflict, along with updates on recent legislative developments spanning the Foreign Intelligence Surveillance Act and Secure America Act. Plus, a look a renewed efforts from the Trump administration to enact new tariffs. Featured is Shane Lieberman, Senior Governmental Affairs Advisor, Governmental Affairs US. Host: Daniel Cassidy

The expected error from the ECB was accompanied by rhetoric citing concerns about oil price pressures broadening throughout the Eurozone economy. There is no evidence of this reported broadening—non-oil prices should be expected to pass on oil-related costs, and only a wage-spiral or profit-led inflation would constitute a broadening of inflation pressures. These are notable by their absence. Nonetheless, the Teutonic cry of “we must have discipline” seems to be echoing throughout the ECB, raising the risk that the error will be compounded with a further rate increase.

The ECB is almost certain to commit a policy mistake today. Raising rates will not change Eurozone inflation or inflation expectations. This policy is stuck in an unhelpful 2022 mindset. Consumers will continue to reduce savings rates to pay for higher oil prices. The main consequence of today’s error is to increase fragility in the economy, rather than doing more serious damage.