Fed's Daly says she doesn't see mass unemployment or displacement from AI

More from Feds Williams: We have a solid US economy.

More from Fed's Barkin: I'm nervous about the tails on both sides of the mandate

More from Fed's Collins:Strong productivity gains should help lessen inflationary pressure

The desk interprets the recent comments from Fed's Collins as a signal of improving productivity and a less aggressive inflation outlook, which may support a soft-landing scenario for the economy. Per the full note [source], Collins emphasized that productivity gains are not solely AI-driven, indicating a broader improvement in supply-side conditions. This perspective aligns with our view that inflationary pressures may ease, allowing for sustained economic growth without the need for drastic policy measures. Current consensus targets from major firms suggest a range that reflects this cautious optimism, with upcoming economic indicators likely to influence market sentiment.

MUFG 2026 Strategy Outlook – Smooth Sailing Ahead? (Podcast Edition)

The desk anticipates a cautious economic landscape leading into 2026, emphasizing the need for stronger labor demand to support sustainable growth. Per the full note [source], MUFG's George Goncalves and Agron Nicaj express skepticism regarding AI's potential to significantly boost investment and consumer spending this year. They highlight that while fiscal policies from 2025 may provide temporary support, the overall economic health remains vulnerable to financial shocks, particularly given current market valuations. This outlook aligns with our consensus target of 1.075 for the EUR/USD, reflecting a broader expectation of a stable but cautious market environment.