UBS On-Air: Market Moves UBS On-Air: Paul Donovan Daily Audio 'The UFP – Unsustainable Fiscal Position'
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Jul 2, 2025 The US Senate has passed a bill that solidifies an unsustainable fiscal position, heading to the House amidst fiscal conservative pushback. This could lead to significant shifts in economic impacts, particularly in how wealth is redistributed. The discussion spans broader trade tensions, including potential import taxes and the implications for UK trade post-Brexit. Additionally, evolving trade dynamics between the UK and EU are explored, highlighting inconsistencies in US labor market data and the vigilance of investors on euro area unemployment.
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Unsustainable US Fiscal Policy Enshrined
- US Senate has passed legislation embedding an unsustainable fiscal path into law.
- Political disagreements over the budget details won't alter market perceptions shortly.
Trade Taxes Stir Market Attention
- Trade and related taxes are creating more market excitement than fiscal policy.
- Japan uniquely absorbed some US tax hikes, especially in car exports, defying previous trends.
EU Blocks UK Trade Bloc Membership
- The EU appears to be blocking UK membership in a trade bloc easing post-Brexit trade.
- This action contradicts recent moves toward better UK-EU trade cooperation, possibly political posturing.