UBS: Now expects the Fed to cut rates by 100 basis points this year

UBS currently expects the Federal Reserve to cut interest rates by 100 basis points this year, higher than the previous forecast of 50 basis points. UBS stated in the report that unless the August employment report shows strong performance, UBS believes that the Fed will begin a easing cycle at the September meeting, cutting rates by 50 basis points. "Our fundamental judgment remains that the U.S. economy will avoid a recession, and the growth rate will remain close to the trend level of around 2%. With interest rates at a 23-year high, the Fed has enough flexibility to support the economy and the markets." UBS emphasized that overall household financial conditions are good, real incomes are growing, average debt servicing costs remain low compared to historical averages, and total net wealth has increased by 37% since the beginning of the pandemic