UBS On-Air: Market Moves Top of the Morning: CIO Strategy Snapshot - Running it hot
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Dec 8, 2025 In a revealing conversation with Jason Draho, Head of Asset Allocation Americas at UBS, key insights emerge on the current economic landscape. He analyzes signs of labor market softness and rising layoffs while discussing trends in inflation, indicating a potential easing in Fed policy. Draho explains the concept of 'running hot' and its implications for GDP growth. He also offers market positioning advice, highlighting cyclical strength and preferred asset classes. Get ready for an informed look at upcoming economic data and the impact on investment strategy!
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Resilient Growth With Labor Softness
- The U.S. economy shows resilient real spending and solid third-quarter GDP estimates around 3–3.6%.
- Labor softness and moderating inflation suggest low recession risk but require monitoring of upcoming labor data.
Watch Fed Messaging And Labor Data
- Watch the Fed's language and dot plot since a hawkish cut and retained optionality are likely.
- Monitor October–December labor data before assuming further cuts in January.
What 'Running It Hot' Means
- "Running it hot" means deliberately supporting higher nominal GDP with easier policy and fiscal boosts.
- This can lift equities but risks higher rate volatility if bond yields rise.