UBS On-Air: House View

The S&P 500 reached a record high despite ongoing market risks. We think AI investment, broadening earnings growth, and a resilient US economy should support further gains. Investors should maintain diversified equity exposure across sectors and regions.

The Nasdaq reached a record high despite elevated Treasury yields, but the rally remains concentrated in a narrow group of large technology companies. Investors should maintain diversified core equity exposure as they position for further upside.

Lower oil prices and softer US jobs data have reduced immediate concerns about further Federal Reserve tightening, but geopolitical risks and elevated bond yields could keep markets volatile. We recommend positioning for further equity gains while diversifying and managing concentration risk.

The sell-off in US Treasuries reflects growing concern that inflation and policy rates could remain elevated. While further disinflation, easing energy pressures, or policy intervention may slow the rise in yields, volatility is likely to remain high in the near term. Investors should calibrate duration and credit risk carefully.

Long-dated Treasury yields have risen to multi-decade highs. But resilient growth, robust earnings, and accelerating AI adoption should help equities absorb the valuation pressure from higher yields. We continue to recommend positioning for further equity gains through broad sector and regional diversification.

Higher interest rates can be a headwind for many investments, but they can also create a more favorable environment for hedge funds. A higher cost of capital increases differences among companies, economies, and securities, giving active managers more opportunities to identify relative leaders and laggards.

Potential delays at a major US data center have intensified scrutiny of AI infrastructure financing. We don’t see this as a risk to compute demand itself, but if it widens, it could affect deployment timelines, funding costs, and investment returns. We continue to favor diversified thematic exposure to both the AI and Power and resources opportunities across public and private markets, with an emphasis on quality and balance-sheet strength.

Strong US activity, higher oil prices, and a weak Treasury auction pushed the 10-year yield above 5.1% and weighed on equities. But we expect less Fed tightening than markets currently price, while resilient growth and robust earnings should help risk assets absorb measured rate increases.

Strong US activity, higher oil prices, and a weak Treasury auction pushed the 10-year yield above 5.1% and weighed on equities. But we expect less Fed tightening than markets currently price, while resilient growth and robust earnings should help risk assets absorb measured rate increases.

Oil prices fell on signs of progress in US-Iran talks, but geopolitical and market risks remain. We expect equities to rise further, although periods of volatility are likely. Investors can strengthen portfolios with capital preservation strategies, broad commodities, and alternatives.