House Call: Talking Equity Markets with UBS Asset Management
At a Glance
The desk posits that the bullish momentum in U.S. equities, as outlined by Jeremy Zirin of UBS Asset Management, is set to influence broader market sentiment, particularly in the FX space. With U.S. stocks achieving nearly 18% return in 2025 and driven largely by sectors leveraging AI, there is potential for a stabilizing dollar given the strong performance outlook. Per the full note source, the continued leadership from technology and communication sectors could foster a comparable strength in the dollar versus EUR, which has been under pressure amid the ECB's cautious approach. This bullish outlook aligns with our internal consensus target for USD/EUR to trend towards 1.075 in the coming months.
Key Takeaways
- 01U.S. stocks posted an 18% return in 2025, continuing a bullish trend.
- 02AI-driven sectors are leading market growth, reinforcing dollar strength.
- 03The desk targets USD/EUR at 1.075, aligned with a generally positive outlook for the dollar.
- 04There is divergence among major firms regarding the strength of the dollar, with some anticipating a potential reversal.
Full Analysis
What the desk is arguing
The desk asserts that the ongoing bullish trend in U.S. equities, particularly influenced by AI-related sectors, is poised to sustain investor confidence in USD assets. This aligns with UBS Asset Management's retrospective on 2025, highlighting the third consecutive year of sizable equity gains, which usually translates to a stronger dollar environment amid risk-on sentiment.
The S&P 500's nearly 18% return, with notable leadership from the technology and communication services sectors, supports a robust U.S. economic narrative. As these sectors show resilience and growth, emerging market currencies may face additional headwinds, maintaining a preference for USD.
Where it sits in our coverage
Our consensus target for USD/EUR is positioned at 1.075, aligning closely with current market sentiments surrounding recovery post-2025.
We observe targets from significant firms: - jpmorgan: 1.10 (Mar26) - bofa: 1.04 (Mar26) Given this distribution, our view sits at the upper end of expectations, suggesting a potential strengthening trade.
How other firms see it
Several firms, including jpmorgan and citi, maintain bullish outlooks on the USD, reflecting confidence in U.S. economic metrics and equity performance. In contrast, bofa expresses a more cautious stance regarding USD strength, projecting a lower target for USD/EUR.
Market participants should watch how these perspectives unfold, particularly in the context of performance indicators such as U.S. Non-Farm Payrolls and inflation data, which could sway USD sentiment in the near term.
What the calendar says
No significant calendar events are set to impact this view directly; therefore, the current market dynamics and equity performance will primarily guide movements.
Market Implications
Market watchers should focus on the momentum in U.S. equity markets and monitor USD/EUR levels around 1.075 as a pivotal threshold. Positive sentiment from U.S. corporate earnings can further boost the dollar, particularly against underperforming currencies like the EUR.
From the original
Join Jeremy Zirin, Senior Portfolio Manager of the House View Equity Portfolios and Head of the Private Client US Equity Team with UBS Asset Management, as he shares a performance update for US equities. Host: Dominic Schagar, Senior Equity Investment Specialist. Recorded on 21.0
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