UBS chief predicts that the U.S. election will not be a dull affair for global markets.

• No matter the outcome of the election, market movements are expected. It is uncertain how investors will respond.
• On Nov. 5, markets are preparing for a surge in voter turnout as the U.S. holds both the world's largest stock exchange by market capitalization and its most valuable reserve currency.
• Both Kamala Harris and Donald Trump are predicted to enact policies that will increase the U.S.'s already significant $1.8 trillion budgetary deficit.

UBS head Sergio Ermotti stated on Wednesday that the outcome of the upcoming elections in the world's leading economy will have a significant impact on global markets, regardless of who becomes the leader of the White House.

The upcoming U.S. elections, which are not expected to be uneventful, are still influencing the outlook for the fourth quarter, despite the Swiss bank's third-quarter profit print exceeding analyst forecasts.

In UBS' geographic breakdown, the U.S. is classified under the key Americas region, which has become crucial to the bank's global wealth management performance, generating $2.84 billion revenues in the third quarter.

No matter the outcome of the election, market movements are expected. It is uncertain how investors will respond.

On Nov. 5, voters are heading to the polls, and markets are preparing for the outcome. The U.S. holds both the world's largest reserve currency and the largest stock exchange by market capitalization. As a result, investors are paying close attention to the election's outcome. In anticipation of further interest rate cuts from the U.S. Federal Reserve, investors have been retreating to gold, which has rallied to a new record on Wednesday. Meanwhile, yields on the 10-year U.S. Treasury have been surrendering some gains early on Wednesday after reaching a three-month high at the start of the week.

"According to Arun Sai, senior multi asset strategist at Pictet Asset Management, none of the outcomes for us under a Trump presidency is growth positive. He explained that this is due to Trump's focus on immigration and tariffs, which he believes will lead to inflation. Sai also noted that markets have "more or less priced in a Trump presidency on bonds.""

Kamala Harris, the Democratic candidate and Vice President, is viewed as the spiritual successor of Joe Biden, whose economic legacy was marked by the Inflation Reduction Act and the CHIPS and Science Act. Meanwhile, Donald Trump, the Republican contender and former president, is remembered for reshaping trade ties with China through tariffs. Regardless of who wins, European leaders anticipate some level of American trade protectionism.

Despite being locked in a tight race, both nominees are likely to implement policies that will increase the U.S.' already significant $1.8 trillion budgetary deficit, which the International Monetary Fund estimates could reach 7.6% of the nation's GDP by the end of the year. The Congressional Budget Office forecasts that the deficit could amount to $2 trillion in 2024, equivalent to 7% of GDP this year, and $2.8 trillion by 2034.

"Ermotti stated that the increase in public and government debt is a global issue, not limited to the United States. He believes that it is necessary to analyze the situation in detail and expects it to unfold over time, with no immediate changes."

If Harris wins, financial regulation is expected to become "more proactive and involved," as characterized by "heightened scrutiny, increased intervention, and a push to expand oversight of nonbank financial companies," according to T. Rowe Price's Associate Analyst Gilad Fortgang in September.

Last year, the Biden administration addressed a mini-banking crisis with the collapse of Silicon Valley Bank and Signature Bank. Biden urged regulators to implement safeguards for banks with assets between $100 billion and $250 billion and to enhance supervision over financial institutions.

Ermotti stated that UBS is staying close to clients and helping them navigate the uncertainties of the post-electoral environment. From a bank's perspective, UBS is well positioned to navigate any environment due to its strong capital and balance sheet position.