US economy on track for soft landing, near-100% chance of a Sept cut: UBS
UBS analysts reiterate their confidence in a soft landing for the US economy, with inflation on a downward trend and the Federal Reserve poised to cut rates.
Recent economic data has shown some positive surprises, but UBS believes these don't negate the underlying trend of below-trend growth."The ISM PMIs appear to confirm that growth has slowed," they note, referring to the Institute for Supply Management's purchasing managers indexes. While June retail sales and industrial production figures came in higher than expected, UBS maintains its view of below-trend growth. They point to anecdotal evidence, rising unemployment, and falling core inflation as evidence of this slowdown.
UBS believes the Federal Reserve is taking notice, highlighting recent comments from policymakers, including Chair Powell, suggesting rate cuts are likely to begin in September, aligning with UBS's base case scenario. The market currently sees a near-100% chance of a September cut, with more cuts expected by year-end.
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