UBS On-Air: Market Moves

Xingchen Yu, Senior Investment Strategist from the UBS Chief Investment Office, shares reflections from his latest trip to China, where AI ambition and seamless digital convenience coexist with cautious consumers, fierce competition, and lingering property pressures. Through stories from the ground, he explores an economy moving at two speeds, and what the latest Trump-Xi summit means for a relationship defined by both engagement and strategic competition. Reference Xingchen’s recent blog: Reflections on my latest trip to China, two years on. Host: Daniel Cassidy

The important point from yesterday’s US data was not the larger-than-expected downward pressures on reported inflation—these are technical changes that US consumers do not experience in their daily struggles with the affordability crisis. The important point was savings. Lowering savings rates are how US consumers keep spending. The savings rate level was revised higher. This suggests savings can pay for tariffs and oil prices for longer.

UK second quarter GDP was revised stronger, as new methods reveal how much new economic activity has been missed from the data. Rising real disposable incomes encouraged a rise in the UK household savings rate. If the Gulf war does not, in fact, turn into a forever war and oil prices come down, the impact on real disposable incomes should be positive; but that would probably then be used to rebuild savings rates rather than accelerate spending.

The rise in treasury yields continues to be top of mind for investors - Jason Draho, Head of Asset Allocation Americas from the UBS Chief Investment Office, explains why they’re rising. We also touch on an outlook for oil prices, new developments in agentic AI, and what it all means for your portfolio. Host: Daniel Cassidy

Bond yields and oil prices continue their close relationship. Central banks are supposed to look through an oil price shock as being beyond their control. However, if central banks seemingly care about oil, the only policy remedy is to weaken the non-oil economy, as something they can control. In that case, higher oil prices make it more likely interest rates will have to rise to recession-inducing levels. We are not at that stage, but there are enough oil price comments to have markets contemplating more repressive monetary policies.