Live Updates > Live Update Details
2026-11-02 14:56:24
[UBS: Lagarde's early departure is unlikely to change the ECB's policy outlook; subsequent interest rate hike expectations may be high] (1) UBS believes that the early departure of ECB President Lagarde is unlikely to change the ECB's monetary policy outlook. The leadership transition is expected to proceed smoothly, and future interest rate trends will still mainly depend on inflation, wages, economic growth, and financing conditions. (2) Regarding monetary policy, although the ECB has raised interest rates twice this year, inflation is still about twice the target. However, UBS believes that the market's expectation of a cumulative 75 basis point rate hike may be too high. High energy prices make a December rate hike still possible, but the ECB is more likely to wait for further evidence of sustained inflation. (3) Regarding the bond market, UBS expects Eurozone sovereign bond yields to gradually decline in 2027. However, considering fiscal risks and increased bond issuance, UBS is more optimistic about short- to medium-term high-rated bonds, including agency bonds, guaranteed bonds, and investment-grade corporate bonds. (4) In the foreign exchange market, UBS believes that the recent decline in the euro has exceeded what the fundamentals can explain, and maintains its forecast that the euro will rebound to 1.16 against the US dollar by the end of the year. It also suggests gradually reducing excessive dollar exposure. However, energy prices, monetary policy divergence, sovereign bond spreads and geopolitical situation may still exacerbate exchange rate volatility.
