UBS sees global markets on edge as the U.S. presidential election nears. UBS Group AG CEO Sergio Ermotti warned that whether it’s Kamala Harris or Donald Trump in the White House, the impact will cut deep across markets.
“The outlook for the fourth quarter is clearly still somehow influenced by the uncertainties we see on the macroeconomic and geopolitical front,” Ermotti told CNBC on Wednesday. He called the election “not going to be an uneventful event.” UBS’s Americas division, especially the U.S., which alone raked in $2.84 billion in the last quarter, is critical to UBS’s wealth management revenues, a big player in UBS’s profits.
Ermotti didn’t mince words about the stakes. “We do expect, no matter who wins and the outcome, we do expect some market movements. And it remains to be seen how investors will react,” he added. That’s the line straight from the top at UBS: market reaction, not election results, is where the big shifts will come. As November 5 looms, both big money and average investors are bracing themselves for what’s coming.
Market movements already stirring
The markets have already shown signs of caution. With polls heating up and economic policies on the line, assets like gold, the usual safe-haven, spiked to record highs. Meanwhile, the 10-year U.S. Treasury yield lost some of its recent gains after a strong start earlier this week. The jitters extend beyond gold and treasuries, as UBS and investors across the board wait for clues on rate cuts from the U.S. Federal Reserve.
Whoever takes office will inherit a hefty budget deficit, expected to hit $1.8 trillion by year’s end, and likely won’t ease spending anytime soon. UBS is tracking how these numbers play out. A tighter race between Harris and Trump could mean policies that impact international trade and American budgets more drastically.
Vice President Kamala Harris, seen as a Joe Biden torchbearer, inherits Biden’s one-term economic legacy of acts like the Inflation Reduction Act and CHIPS and Science Act. On the other side, Trump’s policies are etched into trade reworks, including tariffs on China. But for Europe, who wins may make little difference, as many leaders anticipate a layer of U.S. trade protectionism either way.
Both camps will drive up the already ballooning U.S. debt, now estimated by the IMF to hit 7.6% of GDP by year’s end. The Congressional Budget Office forecasts the deficit could jump to $2 trillion in 2024, hitting 7% of GDP, and may go as high as $2.8 trillion by 2034.
This is a major factor for Ermotti, who bluntly laid out UBS’s worries: “Generally speaking, it’s our concern that public debt and government debt is increasing all over in the world,” he stated. He expects debt issues to “play out over time” but doesn’t expect immediate relief, given the depth of existing financial commitments.
UBS prepares for post-election volatility
UBS isn’t taking any chances. According to Ermotti, the bank is keeping a close watch on clients, helping them “navigate these uncertainties.” UBS is “well positioned to navigate any environment,” he said, highlighting their “very strong capital and balance sheet position” as a buffer against whatever the election throws their way.
For UBS, whose Q3 net income surged to $1.4 billion, almost twice the $783.3 million expected, there’s no room for slacking. The results benefited from steady lending income and careful cost-cutting.
On the outlook, UBS flagged potential setbacks. The bank noted that while a U.S. soft landing seems possible, global economic growth remains shaky. It expects interest income to drop in Q4 with seasonal cost upticks adding to the pressure. The quarter closed in what Ermotti called “periods of high volatility and dislocation,” with global markets barely getting a breather from economic and political shifts.Â
Adding to its load, UBS continues its merger with Credit Suisse, its former rival taken over last year in an emergency bailout. There’s more in store on this front, as UBS faces Swiss political scrutiny over its capital levels and could see an additional $25 billion requirement imposed.
Beyond the American election and UBS’s integration efforts, crypto markets are also in a volatile zone. Bitcoin, in particular, is inching toward a breakthrough. The token is close to breaking out of a seven-month consolidation range, with the market eyeing new all-time highs. This week, Bitcoin finally rallied and is trading at around $71,910.
Market watchers have studied Bitcoin’s history, which has consistently hit peaks between Fibonacci retracement levels of 1.618 and 2.272. If Bitcoin sticks to this trend, a 2025-2026 top could land between $173,088 and $458,319. However, the reality could play out differently. Each cycle high since 2013 has fallen slightly short of previous levels, suggesting that the next peak may fall below the $173,000 mark.
