UBS On-Air: Market Moves UBS On-Air: Paul Donovan Daily Audio 'Hints at consequences'
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Jun 18, 2025 Recent US data reveals a decline in retail sales linked to trade tax effects, particularly impacting auto purchases. Anticipation of new tariffs has shifted consumer behavior, with Japan's automakers absorbing some costs in export pricing. The discussion shifts to the Federal Reserve's upcoming decisions based on these economic signals. Additionally, the podcast addresses how geopolitical tensions, especially between Israel and Iran, and rising energy prices in the UK, are influencing market outlook and investor sentiment.
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Auto Sales Advance Due to Tariffs
- US retail sales weakened in May due to consumers advancing car purchases before trade taxes. - This shift caused a drop in auto sales as people bought early to avoid tariff impacts.
Exporters Mostly Pass Tariffs On
- Import prices rose, showing exporters mostly don't absorb US trade tariffs. - Japan's auto exporters are a rare exception, cutting their vehicle export prices by 4.7% in May.
Fed Expected To Hold Rates
- Expect the Federal Reserve to keep rates unchanged in its June meeting. - The Fed will wait for clear signs of economic slowdown before considering rate cuts due to trade tax uncertainty.