ab 17 June 2025 Global Research Global Economics & Strategy Global Economic and Market Outlook 2025-26 (select slides) Economics Global Arend Kapteyn Economist arend.kapteyn@ubs.com +44-20-7567 0531 This report has been prepared by UBS AG London Branch. ANALYST CERTIFICATION AND REQUIRED DISCLOSURES, including information on the Quantitative Research Review published by UBS, begin on page 46. Tariff uncertainty is driving the outlook The Court of International Trade has halted 75% of Trump's tariffs (those ...

18 June 2025 | 8:32PM EDT US Daily: June FOMC Recap: Taking Higher Tariffs on Board, Cautiously (Mericle) Jan Hatzius +1(212)902-0394 | jan.hatzius@gs.com Goldman Sachs & Co. LLC Alec Phillips +1(202)637-3746 | alec.phillips@gs.com Goldman Sachs & Co. LLC David Mericle +1(212)357-2619 | david.mericle@gs.com Goldman Sachs & Co. LLC Ronnie Walker +1(917)343-4543 | ronnie.walker@gs.com Goldman Sachs & Co. LLC Manuel Abecasis n FOMC participants raised their inflation forecasts and lowered their GDP growth fore ...

Investment Rating - The report does not explicitly provide an investment rating for the industry Core Viewpoints - Concerns over supply shortages have led to a surge in oil prices, but the impact on Asia is expected to be manageable due to lower oil burdens and moderate inflation [1][9] - If oil prices remain above $85 per barrel and the dollar continues to strengthen, it may delay interest rate cuts in the region [1][9] - Countries like Thailand, South Korea, and India face greater growth downside risks due to larger oil and gas trade deficits [3][9] Summary by Sections Oil Price Impact - The report estimates that a $10 increase in oil prices could raise Asia's CPI and current account balance by 40 basis points [8][36] - Asia's oil burden is currently below its long-term average, with projections indicating it could drop to 2.8% of GDP if oil prices average $75 per barrel [14][15] Trade Balance - Asia is the most oil-import dependent region, with oil accounting for 25% of its energy needs, and 80% of oil demand met through imports [10][12] - As of April 2025, Asia's oil and gas trade balance was -2.4% of GDP, compared to -1.7% for the Euro Area and 0.04% for the US [10][13] Macroeconomic Stability - Current macroeconomic indicators in Asia show good stability regarding inflation and current account balances [22] - Inflation is projected to rise slightly with oil price increases, but most economies are within central banks' comfort zones [22][36] Central Bank Policies - The report discusses how rising oil prices may influence monetary policy across different countries, with varying degrees of sensitivity to inflation and growth risks [47][48] - Countries like Australia and India may maintain a dovish stance despite rising oil prices, while the Philippines faces the highest risk due to its significant oil price exposure [49][52]

Economic Outlook - The economy is growing, with unemployment at 42% [3] - The economy is growing at an estimated rate of 15% to 2% [3] - Sentiment has increased from very low levels, but remains depressed [3][4] - The current monetary policy allows for timely responses to economic changes, with careful monitoring of data [7] Inflation & Tariffs - Inflation has cooled to roughly 2% despite tariffs [1] - There are concerns that tariffs could lead to demand destruction and slower growth, potentially keeping inflation low [7] - The likelihood of lower inflation due to tariffs is uncertain, requiring several months of cool inflation data to confirm [7] Housing Market - The housing market faces both short-term and long-term challenges, including a housing shortage and high rates [4] - Restoring price stability and maintaining a strong labor market are seen as the best approaches to support the housing market [5] Job Market - Overall labor force participation, wages, and job creation are at healthy levels [5] - There may be a very slow, continued cooling in the job market, but it is not currently troubling [6] Monetary Policy & Rate Paths - Rate paths are data-dependent and subject to high uncertainty [9][10] - Rate paths involving cuts suggest an expectation that cuts will become appropriate [9]

last year a surprise rate hike from the Bank of Japan nuked financial markets the world over and sent Bitcoin plunging 30% but if you thought that was bad Japan's monetary wos might be about to spill over again for an act two that could be much worse so stay tuned to find out why the market for Japanese government bonds could end up being the global fiat ponzies canary in the coal mine my name is Nick and you're watching the coin bureau when the Bank of Japan raised its policy rate from 0.1% to 0.25% 25% la ...

when we see talk about a weaker dollar at the same time as we see uh talk about an easier monetary policy and so on, we have to understand that one man's debts are another man's assets. And so if you weaken the dollar and you and you produce more money, which is are the things we're considering now that are being considered that that lessens the value of the money that holders of that debt are going to get paid back with. So that is the nature of the tradeoffs that are faced and are inevitable when there's ...

Investment Rating - The report does not explicitly provide an investment rating for the industry Core Insights - Global economic growth is projected to remain steady at around 3.2% for 2024 and 2025, primarily driven by emerging economies [36][39] - The region's economic growth is estimated at 2.2% for 2024 and 2.4% for 2025, indicating a low-growth trajectory [34][36] - The region is experiencing a "trap of low capacity for growth," with average annual growth from 2015 to 2024 at only 1% [30][35] - Inflation rates are converging towards target ranges, albeit slowly, with falling inflation prompting looser monetary policies in the region [26][33] Summary by Sections Executive Summary - Global economic growth is expected to hold steady, driven by emerging economies [26] - The region's debt issuance on international markets is increasing, but net resource transfers abroad are also rising [26] - Economic activity remains low, increasingly reliant on private consumption [26] - Labour markets show modest improvements despite low job creation [26] - Fiscal space in Latin America and the Caribbean remains limited [26] - Inflation is converging towards target ranges, albeit at a slower pace [26] Global Context - The global economy is projected to grow at 3.2% in 2024, with the United States contributing significantly [36][39] - Major central banks have expanded liquidity, ending the tight monetary cycle [40][41] - Increased global liquidity has led to higher capital flows, primarily towards developed economies [46] Economic Activity - The region's GDP growth is projected at 2.2% for 2024, reflecting weak domestic demand and a smaller external contribution [51] - Economic growth in South America is accelerating, while Mexico and Central America are experiencing slower growth [52] External Sector - The region's current account deficit is expected to widen, driven by higher interest payments abroad [47] - Foreign direct investment inflows have increased significantly, accounting for 3.2% of GDP [49] - Debt issuance in international markets has risen by 35% year-on-year to US$ 98.9 billion [50] Prices - Inflation in the region is generally declining, with core and food inflation converging to central bank targets [20] Employment and Wages - Employment in Latin America grew by 1.7% in 2024, but growth in the number of employed people is slowing [85] - Real wages rose in the first half of 2024, although gender gaps in participation and unemployment persist [93][94] Macroeconomic Policies - Fiscal balances are stabilizing but remain in substantial deficit, with high public debt levels [112][113] - Monetary policy rates have been cut across the region, although some countries maintain a restrictive stance [118]

Summary of Key Points from the Conference Call Industry Overview - The conference call primarily discusses the **Global Macro Outlook**, focusing on **US Rates**, **International Rates**, **Commodities**, **Currencies**, and **Emerging Markets** [3][4][5][6]. Core Insights and Arguments US Rates - **Treasury Yield Forecast**: The forecast for 10-year Treasury yields has been revised upward to **4.35%** by year-end, from **4.00%** previously. The 2-year Treasury yield is now expected to end the year at **3.50%**, up from **3.10%** [7][15]. - **Impact of Fiscal Policy**: The budget reconciliation bill could raise the primary deficit by **$150 billion** from FY25-26, which is **0.4% of GDP**. This could be offset by an estimated **$100 billion to $200 billion** in tariff revenue [31][32]. International Rates - **European Rates**: The recommendation is to stay **overweight (OW)** on European rates despite ongoing challenges [45]. Commodities - **Oil Demand**: Global oil demand has softened, primarily due to a decline in US oil consumption. As of May 20, demand increased by **340,000 barrels per day (kbd)** but remains nearly **300 kbd** below projections [92]. - **Price Forecasts**: Price forecasts for natural gas in Northwest Europe have been lowered to **35 EUR/MWh** for 2Q25 and 3Q25, down from **40/45 EUR/MWh** [7][97]. Copper prices are expected to average **$9,225/mt** over 2H25, while aluminum prices are forecasted at **$2,325/mt** [100]. Currencies - **Weaker Dollar Strategy**: The strategic call remains for a weaker dollar following the US-China tariff de-escalation. The dollar's performance is expected to be influenced by data rather than policy [5][69][72]. - **USD/CNY Forecast**: The forecast for USD/CNY has been adjusted downward, with expectations of **7.20** in 2Q and **7.30** in 4Q [89]. Emerging Markets - **Sovereign and Corporate Ratings**: The recommendation is to stay **underweight (UW)** on EM sovereigns while moving EM corporates to **market weight (MW)** due to tariff reprieve [8][45]. Other Important Insights - **Market Positioning**: Investor positioning in the Treasury market is no longer as stretched to the long side, indicating that active investors have more scope to add duration [26]. - **Foreign Holdings**: Foreign investors own approximately **30%** of the Treasury market, predominantly in short-dated securities [37][40]. - **Moody's Downgrade Impact**: Following Moody's downgrade of US debt, risks are skewed towards a bearish steepening in the near term, with expectations of higher interest expenses [32][36]. This summary encapsulates the key points discussed in the conference call, providing insights into the macroeconomic landscape, commodity forecasts, currency strategies, and emerging market dynamics.

FOMC Minutes of the Federal Open Market Committee A joint meeting of the Federal Open Market Committee and the Board of Governors of the Federal Reserve System was held in the offices of the Board of Governors on Tuesday, May 6, 2025, at 8:30 a.m. and continued on Wednesday, May 7, 2025, at 9:00 a.m.1 Review of Monetary Policy Strategy, Tools, and Communications Committee participants continued their discussions related to their review of the Federal Reserve's monetary policy framework, with a focus on the ...

ISSUE 139 | May 15, 2025 | 11:35 AM EDT FED INDEPENDENCE: HOW CONCERNING? President Trump's public criticism of the Fed and, more importantly, his attempts to turn words into action by setting in motion a challenge to the landmark ruling that has prevented presidents from removing officials of independent agencies without cause have raised serious concerns about Fed independence. We talk to former Fed Vice Chair Richard Clarida, the Hoover Institution's John Cochrane, and GS' Jan Hatzius and Joseph Briggs, ...