UBS strategists have published their latest House View Briefcase, responding to client’s critical inquiries about market risks and investment strategies for the second half of 2025. This analysis dives into essential elements from fiscal policies to international stock prospects.

Market Implications of the U.S. Budget Debate

UBS remains optimistic regarding U.S. government borrowing despite concerns over potential debt increases from former President Trump’s fiscal strategies. The recommendation emphasizes holding high-quality bonds to navigate volatility while utilizing economic tracking tools to anticipate market movements.

Future of the U.S. Dollar

UBS anticipates further bearish conditions for the dollar, with projections suggesting a target of 1.20 EUR/USD by mid-2026, driven by fiscal strains. Investors are encouraged to reduce dollar exposure accordingly.

Utilizing Idle Cash Effectively

Investors should avoid holding extended idle cash. UBS suggests exploring high-grade corporate bonds and other diversified assets focused on income generation.

Entering Markets Gradually

Phased entry into markets can mitigate timing risks and facilitate momentum capture rather than missing key rebounds.

Forecast for U.S. Equities

UBS anticipates an S&P 500 year-end target of 6,200, driven by a projected 6% earnings growth for 2025. Suggested sectors for investment include Financials, Technology, and Healthcare for optimal positioning.

Conclusion and Call to Action

UBS’s insights provide a comprehensive approach for investors as they navigate a potentially volatile market landscape in the latter half of 2025. Utilizing tracking tools and adaptable strategies will empower informed decision-making for success.