UBS_Economics-Global_Economics_Strategy_UBS_World_at_a_Glance_Kapteyn-115214388_28页_3mb

UBS Global Economics & Strategy Summary

Overview

This UBS report, published on 6 May 2025, analyzes global economic outlook, market impacts, and investment strategies in light of escalating trade tariffs. Key themes include: (1) Tariffs reducing global growth forecasts by 60 basis points; (2) Monetary policy shifts with potential interest rate cuts; (3) Asset allocation advising defensive positions in fixed income and emerging markets. Overall, the report highlights a significant economic shock due to trade tensions, with region-specific impacts and recommendations.

Global Key Messages (Core Economics)

• Global Growth: UBS lowers 2025 global GDP growth to 2.5%, citing ~$800bn tariff damage (post-April 2 adjustments).
• Inflation: Core inflation rising in the US (4.5% peak), Europe, and others, but tariffs may cause deflationary pressures globally.
• Policy: Central banks, particularly the Fed and ECB, expected to cut rates (Fed: ~100bps in 2025; ECB: 25-50bps cuts).
• Risks: Supply chain disruptions, recessions in export-dependent economies, and policy uncertainty.

Strategy Recommendations (Investment)

• Asset Allocation: Sell US equities (rally driven), overweight Europe and emerging markets; buy US fixed income due to real value (10Y yield ~3.80%).
• Currencies: EUR and JPY driven by dollar weakness; gold up to $3500 by YE.
• Rates: Short US yields, long steepeners in credit/sovereigns; value in Italian 10Y.
• EM: Resilience shown, but cautious due to export/China risks; tactical buys in EM FX.

Country-Specific Highlights

• US: Slowing growth, inverted yield curve risk, Fed's gradual easing.
• Eurozone: 0.7-1.1% growth, ECB cuts expected later, deflation risks debated.
• China: Growth stable, tariffs containment key, fiscal stimulus expected.
• Japan: Possible mild recession, yen strength, BoJ normalization pause.
• Emerging Markets: Export-oriented economies hit more, crisis scenario for Mexico (-0.7%).
• Risk Premia: Elevated volatility expected through 2026 due to tariffs and uncertainty.

Upcoming Events and Market Outlook

• Central Bank Meetings: May includes ECB, BoJ, SNB decisions shaping policy.
• Volatility and Correlations: US correlations rising post-AI; Europe less affected.
• EM Focus: Disinflation risks from China, containing EM growth outlook.

Risks and Methodology

• Multi-asset risks include market/credit/inflation risks; conflicts managed via barriers.
• Forecasts based on scenario analysis; past performance not indicative of future results.

**Summary Conclusion**: Tariffs drive significant global slowdown and policy shifts, with key recommendations emphasizing fixed-income, currency plays, and region-specific equities while cautioning high volatility and compliance risks.