UBS On-Air: Market Moves

Derek Pines is a Senior Managing Director and Portfolio Manager at Bramshill Investments. Derek joins Frank Sileo, Senior Fixed Income Strategist Americas from the UBS Chief Investment Office, for a comprehensive discussion on the preferred securities market. They cover a performance update and outlook, risk considerations, positioning views, and more.

Crude oil prices and diesel prices are up (there seems to be uncertainty about whether last Friday’s pledge to release diesel reserves is actually just confirming previously announced reserve releases). Bonds and equities do not like this. Central banks have pretended that they can do something about oil prices, which worries investors. If central banks want to offset inflation from an oil shock, they need to create a recession (or near recession) in the non-oil economy via aggressively restrictive policy. That does not favor bonds or equities.

With the next Fed policy meeting just a few weeks away, Andrew Dubinsky, US Economist from the UBS Chief Investment Office, drops by the studio to share CIO’s expectations and the factors that will likely inform the central bank’s policy decision. We also cover the health of the US labor market, GDP picture, and the latest on inflation. Host: Daniel Cassidy

The political costs of the Gulf war are evident—US President Trump suggested removing the federal tax on gasoline. Gasoline prices (unlike diesel) feed directly into US consumer price calculations. However, even supposing Congress was in session long enough to pass the legislation, a less than 19% reduction per US gallon has to be considered against a price increase of over USD 1.25 since the war began. But sensitivity to the political cost may encourage optimism about US attitudes toward a deal with Iran.

A wide-ranging conversation on the current rate environment, the road ahead for monetary policy, issuance implications, and the landscape for broader fixed income investing, recorded at the PIMCO studios in Newport Beach, California. Featured are Mike Cudzil, Managing Director and Generalist Portfolio Manager at PIMCO, and Leslie Falconio, Managing Director and Head of Taxable Fixed Income Strategy Americas with the UBS Chief Investment Office. Host: Daniel Cassidy