UBS On-Air: Market Moves Top of the Morning: CIO Strategy Snapshot - The two most important numbers in economics
5 snips
Oct 27, 2025 In this insightful discussion, Jason Draho, Head of Asset Allocation Americas at UBS, shares his expertise on economic trends and investment strategies. He highlights the importance of two key numbers: the neutral Fed funds rate and nominal GDP growth. Jason explains how a pro-nominal growth policy can ease debt sustainability and influence market movements. He also discusses the impact of recent U.S.-China trade developments and strong earnings on market highs, alongside expectations for an upcoming Fed interest rate cut.
AI Snips
Chapters
Transcript
Episode notes
Why Markets Reached New Highs
- Equity gains were driven by a de-escalation in US-China trade rhetoric, stronger-than-expected earnings, and reduced extreme investor positioning.
- Early Q3 reports show ~80% beating earnings expectations with a median beat near 5%, lifting market optimism.
Watch Powell For Guidance
- Expect a 25 basis point cut this week and likely another in December, but watch Fed communications for guidance on future moves.
- Monitor Powell's press conference because the Fed will emphasize that cuts are data dependent and may give limited forward guidance.
The Two Most Important Numbers
- The two key numbers to watch are the neutral federal funds rate and nominal GDP growth for the next 1–2 years.
- Both shape monetary policy and the investment outlook despite the neutral rate being unobservable.