UBS On-Air: Market Moves Top of the Morning: CIO Strategy Snapshot - Data concerns of a different sort
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Aug 18, 2025 Jason Draho, Head of Asset Allocation Americas at UBS, shares valuable insights on the July inflation data, suggesting a positive market outlook despite modest inflation trends. He raises concerns over political interference affecting economic data reliability and discusses its implications for investments. Anticipating Fed Chair Jay Powell's speech at Jackson Hole, Draho emphasizes the significance for monetary policy. He also offers investment strategies amidst geopolitical uncertainties, advocating for equities, high-quality fixed income, and gold for protection.
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Political Manipulation Risk Is Low But Not Zero
- Risk of political manipulation at the BLS is low due to institutional barriers and reputational costs.
- However, the firing increased marginal concern amid other data-quality challenges.
Falling Survey Response Rates Degrade Data
- Survey response rates have fallen sharply since the pandemic, degrading representativeness and raising volatility.
- Lower response rates widen confidence intervals and amplify month-to-month noise in labor data.
Seasonal Adjustments Are More Unreliable
- Seasonal-adjustment issues since the pandemic have produced odd swings in monthly employment prints.
- These adjustments can create misleading initial readings that later get revised.