UBS On-Air: Market Moves UBS On-Air: Paul Donovan Daily Audio 'Uncertainty'
May 20, 2025
The podcast delves into the pervasive theme of uncertainty plaguing the Federal Reserve, highlighting a cautious approach to interest rates. It brings attention to the interconnectedness of global events, such as the evolving relations between the UK and EU. Additionally, the discussion shifts to the US President's stance on the Russia-Ukraine conflict, pondering how a potential ceasefire could affect Ukraine’s recovery and market dynamics. Overall, there's a palpable tension as markets await clarity amid swirling uncertainties.
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Fed's Uncertainty Drives Caution
- The Federal Reserve is in a 'wait and see' mode due to significant uncertainty about economic policy and reactions.
- Delays in monetary policy action risk being too late due to policy operating with lags.
UK-EU Relations Improve
- The UK and EU agreed on a reset deal that fosters a more amicable economic partnership.
- Changed US expectations about its defense role have influenced this positive diplomatic development.
Peace Talks’ Mixed Economic Impact
- US President Trump stepped back from mediating Russia-Ukraine talks; immediate negotiations suggested without US involvement.
- Genuine peace could have economic impact through reconstruction; ceasefire alone would cause only short-term market volatility.