Daily Europe

UBS maintains a cautious outlook on Fed rate hikes, expecting stability as inflation pressures moderate. The firm also highlights increased trade uncertainty following the Trump administration's USMCA decision.

Key Takeaways

• 1.Fed Chair Kevin Warsh's commitment to the 2% inflation target remains, but the market's expectation for imminent rate hikes is likely too hawkish.
• 2.The US labor market shows resilience but few signs of overheating, limiting the risk of a wage-price spiral.
• 3.The Trump administration's decision not to renew the USMCA in its current form introduces uncertainty but is not expected to cause a trade shock.

Table of Contents

• From the studio
• Thought of the day
• What to watch: 3 July
• Caught our attention
• Market update
• Global asset class preferences definitions
• Appendix

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