UBS On-Air: Market Moves Top of the Morning: US Financials - Sector update & outlook
Oct 9, 2025
In this discussion, Jeff Harwood, a U.S. financials analyst with UBS, shares insights into the evolving landscape of the financial sector. He highlights UBS's optimistic stance on financials due to improving bank fundamentals and robust capital markets activity. Jeff elaborates on the preference for banks and alternative asset managers, while also addressing the challenges facing traditional asset managers and the insurance sector. Notably, he reviews year-to-date performance across subsectors and previews the upcoming earnings season, underscoring key trends in credit and revenue.
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Financials Thesis Strengthening
- UBS remains constructive on U.S. financials because bank fundamentals, capital markets, and deregulation are improving.
- Capital markets and deregulation have recently become stronger and more durable tailwinds than previously expected.
Cyclical Tilt Within A Defensive-Looking Sector
- UBS favors a cyclical tilt within financials, preferring banks and alternative asset managers.
- Large weights like Berkshire, Visa, and MasterCard make about 25% of the sector defensive, so active sector positioning matters.
Banks Lead Year-To-Date
- Banks have outperformed this year with total returns around 21% YTD versus the S&P 500 near 15%.
- Insurance has lagged, supporting UBS's preference for cyclical over defensive within the sector.