Investors have grown too comfortable. That was the message from UBS chief executive Sergio Ermotti, who told CNBC on Thursday that the past few years have bred a level of complacency in financial markets that doesn’t match the risks now stacking up around the world.
Ermotti said volatility has been surprisingly muted given the environment, and that he would have expected considerably sharper swings in asset prices. “There has been a level of complacency in financial markets in the last few years,” he told CNBC’s Christine Tan.
Part of the reason markets have held up, he acknowledged, is the wave of investment pouring into artificial intelligence, data centers and other emerging technologies, which has helped prop up both economic growth and equity valuations. But that support is running alongside a backdrop that is getting harder to read, not easier.
New problems, old ones unresolved
“New problems or new issues are emerging without any of the old ones being addressed or being closed,” Ermotti said, describing a landscape in which energy and shipping risks tied to the wars in Iran and Ukraine remain live, the U.S.-China rivalry keeps straining supply chains, and rising borrowing costs and stubborn inflation weigh on growth.
The combination is pushing some of the world’s wealthiest investors away from big directional bets. According to Ermotti, UBS clients have spent recent quarters diversifying across sectors and geographies, while still committing capital to AI and technology.
“It’s quite difficult in this environment and not really advisable to have too many strong convictions,” he said.
No wholesale exit from U.S. assets
That caution should not be mistaken for a retreat from American markets. Ermotti said the overall asset allocation of UBS clients hasn’t changed materially over the past year, and the shift toward diversification doesn’t amount to a wholesale move out of U.S. assets.
He noted that UBS saw some money flow into global emerging markets roughly a year ago, but framed that as investors putting idle cash to work rather than actively trimming existing U.S. or dollar positions. “It was more how excess cash was deployed rather than people back trading from the U.S. or from the dollar, so I think that narrative has abated,” Ermotti said, adding that the dollar remains a reference currency.
Higher rates for longer
On monetary policy, Ermotti said sticky inflation that has stayed above central bank targets over the past year makes further tightening unsurprising. He expects major central banks — including the European Central Bank, the Federal Reserve and the Bank of Japan — to lift rates in the coming months.
“The ECB may start hike process. The Fed will follow. We do expect a couple of hikes in the next few months,” he said.
The implication for portfolios is that borrowing costs aren’t likely to snap back to the low levels that prevailed before the latest inflationary surge. Higher rates, Ermotti suggested, are also nudging investors toward a more balanced approach to allocation.
“Inflationary pressure is still there, and it’s not abating, and therefore, I think it’s reasonable to expect higher rates for the foreseeable future,” he said.
For investors who have grown used to calm markets and cheap money, the UBS chief’s message was a reminder that neither condition looks set to return soon.
Source: www.cnbc.com — https://www.cnbc.com/2026/09/10/ubs-ceo-sergio-ermotti-investor-complacency-piling-risks-.html
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