UBS On-Air: Market Moves

China’s July export data was somewhat stronger than expected. The big three electrification exports have collectively been important to export growth. China’s exports to the US are steady around pre-pandemic levels (using China’s data, which is probably a better reflection of trade trends). German June exports were stronger than expected and (of course) past data was revised stronger.

Today is the release of everything economists do not understand about the US economy—otherwise known as second quarter productivity. Productivity has assumed mythical status as people search for AI benefits. While technology should improve a company’s or sector’s productivity, its macro impact is less certain as people move into less productive jobs. Some productivity gains will not be counted—my robot lawnmower has substantially improved my productivity, but cutting my lawn was never part of GDP.

Michael Adelman and Matt Iannuci, along with Eileen Liu, Head of US Client Portfolio Management, join to discuss recent market developments within high yield bonds and broader credit markets.

As global equity markets set new all-time-highs and show signs of recovery from July indigestion, Burkhard outlines the factors that are driving current investor sentiment. We also cover the currency intervention by the US Fed and Bank of Japan. Plus, a market tie-in to Sysiphus, the hero of the ancient Greek-saga “A happy man”.

Oil prices are down and the optimism bias is up. There are hopes for an Iran-Oman settlement on post-war control of the Strait of Hormuz. This would probably mean tolls eventually (probably branded a “tariff” or an “environmental charge” according to political bias). A toll would be economically negligible. Iran cementing control of the Strait has implications for insurance, supply chain security, and Gulf infrastructure investment.