UBS On-Air: Market Moves Top of the Morning: CIO Strategy Snapshot - Shocked but not awed
Mar 23, 2026
Jason Dreho, Head of Asset Allocation Americas at UBS CIO, provides macro and portfolio positioning insight. He discusses the Fed meeting and how central bank moves have re-priced rates. He assesses stagflation risk and why recent market moves reflect inflation shocks rather than growth fears. He outlines practical positioning: stay invested, diversify, trim cyclicals, and consider short-duration bonds and gold.
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Fed Held Rates But Sounded More Hawkish
- The Fed signaled no immediate hikes and kept the median dot at one cut this year while raising growth and inflation forecasts.
- Jason Dreho noted Powell sounded hawkish and markets trimmed expected cuts after factoring a nearer-term inflation shock from oil.
Market Rapidly Repriced Toward Hikes
- Market pricing shifted sharply after the Bank of England and ECB meetings, turning expectations from cuts to potential hikes in Europe.
- Dreho highlighted markets now price multiple ECB hikes and a ~40% chance of a Fed hike this year versus 2.4 expected cuts before the conflict.
Stagflation Comparison Is Unwarranted
- Stagflation comparisons are misplaced because current inflation (~3%) and unemployment (~4–4.5%) produce a much lower 'misery index' than the 1970s.
- Dreho pointed to stronger pre-conflict growth momentum and a narrowly focused oil price shock versus the broad 2022 inflation drivers.