UBS Asset Management note

USD may rise may gain momentum as the US continues to outspend peers on measures to fuel economic growth

  • "If you're spending more then you're going to have a higher growth trajectory"
  • "The new world is less to do with where your cash rates are -- at this phase of the market, it's about who's spending more"

(UBS referring to fiscal support for the economy with this last point)

USD shorts a "very crowded trade"

  • the real squeeze of USD has not yet been seen
  • UBS expects emerging-market currencies, euro coming under pressure as the dollar strengthens and US Treasury yields climb
  • says real UST yields are starting to rise