UBS On-Air: Market Moves Top of the Morning: CIO Strategy Snapshot - What’s next for rate cuts?
Sep 22, 2025
In this discussion, Jason Draho, Head of Asset Allocation Americas at the UBS Chief Investment Office, dives into the recent FOMC rate decision and the market's reaction. He forecasts potential rate cuts through 2026, examining their impact on financial markets. Jason also highlights the CIO's asset allocation strategy, which includes buying equities on dips, favoring securitized credit, and the role of AI in boosting earnings. His insights provide a comprehensive look at navigating a shifting economic landscape.
AI Snips
Chapters
Transcript
Episode notes
Fed's September Move Was Risk Management
- The Fed raised its 2026 GDP and inflation forecasts while lowering unemployment, signaling a slightly more reflationary outlook.
- The September 25bp cut was framed as risk-management, not necessarily the start of persistent easing.
Plan For Three Near-Term Cuts, Then Watch Data
- Expect three more 25bp cuts into early 2025 and remain data dependent about further easing next year.
- Prepare for possibly one or two additional cuts in 2026 but let incoming data drive timing and size.
Wide Dispersion In Fed Expectations
- Market pricing centers around 3.0%–3.25% for the fed funds rate over a year, but consensus is wide.
- The dot plot shows a 125bp spread of views for year-end 2026 reflecting low conviction.