21 May 2025 | S&P 500

Stock markets to experience increased volatility due to uncertain US trade and budget policies – UBS

Stock markets to experience increased volatility due to uncertain US trade and budget policies – UBS

According to UBS strategists, volatility in the US stock market may increase due to uncertainty related to the trade and fiscal policies of the country's administration.

Despite the easing of global trade tensions that have sparked some recovery in the stock market, investors are waiting for the US to take real action on trade deals, UBS analysts said. Until there are clearer signs of a resolution, global trade uncertainty remains.

The deteriorating US fiscal outlook is also playing its role, they said. On Tuesday, Trump appealed to his fellow Republicans in the Congress to pass the new budget bill. It could add from about $3 trillion to $5 trillion to the already existing US national debt, according to some analysts. Also, Trump's fiscal initiatives could increase the supply of Treasuries and put pressure on the debt market, analysts said.

However, despite the mentioned risk factors, the brokerage company does not expect recession in the US economy this year. In general, UBS specialists forecast growth of S&P 500 over the next 12 months with a simultaneous fall in yields of 10-year treasury bonds.

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