UBS strategists have outlined three investment priorities amid growing market volatility ahead of the Federal Reserve meeting scheduled for September 15–16. Market data from CME FedWatch indicates that the probability of a rate hike in September has reached 60.4%, with expectations rising to 70.9% by October and 85.8% by December.
The bank suggests focusing on equities, specifically in the AI, power, resources, and longevity sectors, provided that earnings prospects remain robust. Additionally, UBS recommends the medium-to-long part of the yield curve to capture income and diversification benefits following recent yield increases.
Gold is identified as the third priority, serving as a portfolio hedge despite short-term pressure from higher real rates and a strong dollar. Conversely, the bank has advised clients to reduce excess dollar holdings and has withdrawn its recommendation to use short- to medium-duration bonds as a cash alternative.
The current economic context is shaped by August labor data, which showed a surge of 162 000 in nonfarm payrolls against a forecast of 55 000, while unemployment remained at 4.1%. Investors are now awaiting the August core CPI data, which is set to be released on September 11.
