UBS Global Economics and Strategy: Core Convictions (Multi-Asset Overview)
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UBS's Core Convictions multi-asset overview expects global growth to stay near long-term averages, with AI investment offsetting energy disruption. It sees the Fed and ECB tightening modestly further, depending on the duration and severity of Middle East energy disruption. US CPI is this week's focus, with core inflation expected at 2.41% year-on-year. UBS forecasts 2026 GDP growth of 3.2% globally, 2.4% in the US, 4.5% in China and 0.8% in the euro area, and year-end 2026 yields of 4.80% for the US 10-year Treasury and 3.50% for German Bunds. It is bearish the yen, targeting USDJPY at 160.00 by end-2026, and prefers a basket of high-growth, high-CFROI stocks available cheaply, trading at roughly a 30% P/E discount to an expensive-fundamentals basket. In Brazil, UBS stays long the real and overweight Brazilian equities; if Hungary's 2027 deficit is held at or below 5% of GDP, EUR/HUF could break below 360. Targets include S&P 500 at 8,100 and MSCI World at 1,200 by end-2026, EUR/USD at 1.12, and Q4 2026 Brent at $100/bbl. Trades: a 1-year forward 10s/30s steepener, short 10-year Italian BTPs versus Bunds, and buying USDCHF dips toward 0.8500.