UBS On-Air: Market Moves UBS On-Air: Paul Donovan Daily Audio 'The desire to believe'
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Mar 25, 2026 Market optimism and why investors cling to positive narratives. A 15-point US ceasefire plan and conflicting Iranian responses. How confirmation bias and domestic politics shape market views. UK inflation signals that suggest subdued price pressures. Tariffs showing up in US import prices and the limits of sentiment polls like the German IFO.
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Markets Favor Optimistic Geopolitical Narratives
- Financial markets prefer optimistic narratives during geopolitical shocks.
- Paul Donovan notes markets focus on a 15-point US ceasefire plan despite Iranian dismissals and minimal Strait of Hormuz passage.
Domestic Politics Push Markets Toward Peace Hopes
- Political pain at home intensifies market hope for a quick end to foreign conflicts.
- Donovan cites rising US gasoline prices and a Florida state house upset focused on affordability as reinforcing that pressure.
UK Underlying Inflation Was Benign Pre-Shock
- UK underlying inflation pressures remained benign before recent shocks.
- Paul Donovan highlights lower-than-expected output producer price inflation and downward revisions to input price inflation for February.