UBS On-Air: Market Moves UBS On-Air: Paul Donovan Daily Audio 'The economic “phony war”'
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Mar 26, 2026 Discussion of market skepticism toward US claims about talks with Iran and why verification matters. Analysis of Iran rejecting a 15-point US proposal and investor expectations. Comparison of deadline flexibility for the Strait of Hormuz and trade deals. Exploration of a possible economic “phony war” where price moves have not yet hit activity.
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Markets Distrust Unverified US Peace Claims
- Markets are skeptical of US claims about peace talks with Iran when Iran does not confirm them.
- Paul Donovan notes investors won't accept unverified US statements and view rejected US 15-point proposals as unsurprising evidence of that skepticism.
Oil Price Rise Is Mostly A Price Effect
- Current energy pressures are a price effect rather than an activity shock for the global economy.
- Donovan explains consumers can afford higher gasoline now and shortages haven't yet caused serious physical supply disruptions or big demand destruction.
Demand Restraint Caps Oil Upside
- Oil prices aren't higher because current levels won't trigger large drops in energy demand.
- He says no one expects a 10–20% fall in global energy demand, limiting upside pressure on prices despite war speculation.