UBS Group CEO Sergio Ermotti said financial markets have become overly complacent despite accumulating geopolitical and economic risks, including energy and shipping disruptions linked to the Iran and Ukraine conflicts, supply-chain strains, stubborn inflation and higher borrowing costs. He said investment in artificial intelligence, data centers and other emerging technologies has supported growth and markets but has not removed underlying vulnerabilities. UBS clients are diversifying across sectors and regions while retaining exposure to AI, technology, U.S. assets and the dollar rather than making a wholesale retreat. UBS Wealth Management’s CIO now expects two 25-basis-point Federal Reserve rate increases in 2026, reversing an earlier forecast of unchanged rates, after stronger employment data and July PCE inflation of 3.7% year over year. The bank expects the federal funds target range to rise from 3.50%-3.75% to 4.00%-4.25%, while market pricing for a September hike increased from about 50% to about 60%.