Inflation Data Should Keep Fed Cuts on Track

UBS maintains its view that the Federal Reserve will resume rate cuts mid-year despite strong labor data, targeting two cuts by September. This outlook supports a constructive stance on equities, bonds, and gold.

Key Takeaways

• 1.The Fed is expected to resume interest rate cuts around mid-year, likely with two 25-basis-point cuts between June and September.
• 2.European defense spending is entering a multi-year rearmament cycle, with NATO members targeting 5% of GDP by 2035.
• 3.Weak UK Q4 GDP data (0.1% q/q) reinforces the case for a Bank of England rate cut in March.

Table of Contents

• From the studio
• Thought of the day
• What to watch: 16 February
• A more dovish personnel profile at the Fed should support additional rate cuts.
• Caught our attention
• Market update
• Non-Traditional Assets
• Global asset class preferences definitions
• Appendix

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