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21 August 2026, 08:45 UTC Chief Investment Office GWM Investment Research

Paul Donovan's daily audio: Four billion dollars Audio Paul Donovan, Chief Economist, UBS GWM, UBS AG London Branch

US Treasury Secretary Bessent declared the proposed Treasury buybacks could be four billion dollars. Bond investors seem to feel that four billion dollars is not terribly impressive. Yields rose—though a sense of proportion is helpful. This is hardly a repeat of the 1994 bond market collapse. What matters is whether the bond weakness has attracted US President Trump’s attention, triggering a policy response.

Bessent announced a future fiscal consolidation plan, targeting “waste”. That is not reassuring, as (advanced) economies’ targeting waste for fiscal gain is normally a waste of time. Details of “economic warfare” against Iran are due Monday. Insubstantial sanctions may reignite markets’ optimism bias (and thus hopes of lower inflation). Aggressive sanctions may stoke fears that the Strait of Hormuz remains closed, and US importers may face higher tariffs when buying from Iran’s trading partners.

South Korea’s early August export numbers showed strength, predictably on the back of semiconductors. The Bank of Korea raised rates at its last policy meeting and meets again next week.

UK July retail sales were impacted by weather (sales of electric fans were good). Early discounting seems to have pulled some sales volume from July into June. The volume of fuel sales has trended down, blunting the impact of oil prices.

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This report has been prepared by UBS AG London Branch. Please see important disclaimers and disclosures at the end of the document.

Global asset class preferences definitions The asset class preferences provide high-level guidance to make investment decisions. The preferences reflect the collective judgement of the members of the House View meeting, primarily based on assessments of expected total returns on liquid and commonly known indices, House View scenarios, and analyst convictions over the next 12 months. Note that the tactical asset allocation (TAA) positioning of our different investment strategies may differ from these views due to factors including portfolio construction, concentration, and borrowing constraints. Attractive: We consider this asset class to be attractive. Consider opportunities in this asset class. Neutral: We do not expect outsized returns or losses. Hold longer-term exposure. Unattractive: We consider this asset class to be unattractive. Consider alternative opportunities Note: For equities, we have a five-tier rating system with two additional preferences Most Attractive: We consider this asset class to be among the most attractive. Investors should seek opportunities to add exposure. Least Attractive: We consider this asset class to be among the least attractive. Seek more favorable alternatives opportunities. When equities are included with the other asset classes in the three-tier rating system, we collapse “Most Attractive” with “Attractive” and “Least Attractive” with “Unattractive.”

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