March 2025 | Chief Investment Office GWM | Investment research 1634142_75391ecb-0c55-4276-b21b-f2b548428f25.pdf 2 UBS House View | March 2025
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March 2025 | Chief Investment Office GWM | Investment research 1634142_75391ecb-0c55-4276-b21b-f2b548428f25.pdf 2 UBS House View | March 2025
Publisher
UBS Financial Services Inc.
CIO Global Wealth Management
1285 Avenue of the Americas 8th Floor
This report was published
on 28 Feb 2025
Solita Marcelli
Authors (in alphabetical order)
CIO Content Design
04 Monthly Letter 16 Messages in Focus 18 Asset allocation implementation 20 US economic outlook 22 Equities 23 US equities 24 Bonds 26 Commodities and listed real estate 27 Foreign exchange
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This report has been prepared by UBS AG, UBS Switzerland AG, UBS AG
Singapore Branch, and UBS Financial Services Inc. Please see important dis- claimers and disclosures at the end of this document. 1634142_75391ecb-0c55-4276-b21b-f2b548428f25.pdf March 2025 | UBS House View 3
Follow me on LinkedIn
linkedin.com/solita-marcelli-ubs With President Trump’s second term well underway, investors remain focused on the influx of accelerating policy actions and the impact on an evolving economic landscape.
Volatility has already been a hallmark to begin 2025, with tariffs,
government spending cuts, regulatory shifts, and AI developments like DeepSeek contributing to the choppier trading conditions. But despite these challenges, our base case remains “growth despite tariffs,” as we expect US economic expansion to slow but remain relatively healthy. Recent economic indicators present a nuanced picture. The Atlanta Fed’s GDPNow tracking estimate of 1Q growth stands at -1.5%, and while this might appear alarming on the surface, in our view, it mostly reflects noise rather than a signal that the economy has suddenly started shrinking. The labor market has shown signs of softening, such as a deceleration in job growth, yet remains robust, with low unemployment rates and rising wages. Additionally, recent data showed a decline in consumer spending, although we believe this is largely attributable to sea- sonal factors rather than indicative of a broader downturn.
With economic signals more mixed, market pricing for expected
monetary easing has come more in line with our expectation for two 25-basis-point rate cuts in 2025. US Treasury yields have sub- sequently declined over 50bps since mid-January. While we con- tinue to see the 10-year yield falling further toward 4% by year- end, we recently trimmed our long interest rate exposure after the recent move. We still recommend focusing on the five-year part of the curve, which we believe offers more insulation from deficits, supply risks, and inflation concerns. Within fixed income, we favor investment-grade corporate bonds, agency mortgage-backed securities, and senior loans.
Within equities, volatility will likely persist with policy uncertainty
still elevated. However, fundamentals remain supportive on the heels of healthy results from reporting season to date, and we continue to view the environment as supportive for risk assets. We maintain our year-end 2025 S&P 500 target of 6,600. Our equity sector preferences remain unchanged. We continue to favor infor- mation technology as our Most Attractive sector, with Attractive views on communication services, consumer discretionary, finan- cials, utilities, and health care.
