UBS On-Air: Market Moves Top of the Morning: CIO Strategy Snapshot - Data concerns of a different sort
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Aug 18, 2025 Jason Draho, Head of Asset Allocation Americas at UBS, shares valuable insights on the July inflation data, suggesting a positive market outlook despite modest inflation trends. He raises concerns over political interference affecting economic data reliability and discusses its implications for investments. Anticipating Fed Chair Jay Powell's speech at Jackson Hole, Draho emphasizes the significance for monetary policy. He also offers investment strategies amidst geopolitical uncertainties, advocating for equities, high-quality fixed income, and gold for protection.
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Tariffs Are Feeding Goods Inflation
- July core CPI rose about 0.3% month-over-month, taking year-over-core to just over 3%.
- Core goods inflation and tariffs suggest more goods-price pressure remains in the pipeline.
Producer Prices Jumped More Than Expected
- PPI surprised materially higher with a 0.9% monthly jump versus 0.2–0.3% expected.
- Higher PPI raises concerns about input-price pressures even though historical feed-through to CPI is weak.
Political Manipulation Risk Is Low But Not Zero
- Risk of political manipulation at the BLS is low due to institutional barriers and reputational costs.
- However, the firing increased marginal concern amid other data-quality challenges.