The MUFG Global Markets Podcast

Green capex realignments amid a plethora of uncertainties

 
The first half of this decade has witnessed a significant acceleration in green capex – investment that advances UN Sustainable Development Goals (SDGs). Yet, a combination of tariff-driven uncertainties, focus on corporate returns and interest rate headwinds is set to see a slower pace of growth in the back half of this decade.
 
As corporates re-evaluate the risk/returns on investments, Ehsan Khoman, Head of Research – Commodities, ESG and Emerging Markets (EMEA), believes that uncertainties in today’s operating environment will deepen the differentiation of green capex verticals based on cost curve positioning, elasticity to higher prices/costs as well as consumer appetite. Listen into this week’s podcast, where Ehsan discusses potential US tariff implications on the outlook for key green capex verticals.

What sustainability themes will be prioritised in a deglobalised world?

Recent market volatility, the macro environment, changes to corporate sustainability targets and policy uncertainty have challenged sustainability themes globally. 
Ehsan Khoman, Head of Research – Commodities, ESG and Emerging Markets (EMEA), discusses what corporates could prioritise from a sustainability lens amid an increasingly deglobalised operating environment.
He believes that (1) improving consumer efficiency to reduce consumption intensity and mitigate inflationary pressures as well as (2) the ability to maintain reliable power demand amid aging infrastructure and more extreme weather events by recognising potential downside risks from slowing global growth, could collectively be “efficiency” and “reliability” verticals that can support corporate resiliency in navigating today’s volatility.

Stemming the US crisis of confidence

This week’s Global Markets podcast takes place against a backdrop of financial market turmoil with signs of a building crisis of confidence in US assets. Derek Halpenny, Head of Research Global Markets EMEA & International Securities talks to Chris Jakubowski Head of FI FX Sales about what needs to happen to halt the slide in confidence. There are certain actions that would help but none seems that likely. Derek and Chris also discuss the prospects for JPY and the BoJ’s stance in the midst of increased financial market turmoil.
Disclaimer: www.mufgresearch.com (PDF)

US reciprocal tariffs – sustainability implications

 US President Trump’s “Liberation Day” announcement of (1) a 10% baseline tariff effective from 5 April, along with (2) a set of higher, country-specific “reciprocal” rates on 57 trade partners with which the US has trade deficits from 9 April, has jolted global markets. Chinese policymakers have promptly responded with a broad set of countermeasures that mirrors the US move.
Global financial markets have been in turmoil post the “Liberation Day” announcements with stock markets shedding trillions of dollars, credit spreads widening, oil prices tumbling and currencies gyrating wildly.
From a sustainability lens, if tariffs are sustained, they will raise the stakes for the survival or repeal of advanced manufacturing credits in the US Inflation Reduction Act (IRA) – the largest climate legislation in US history.
Ehsan Khoman, Head of Research – Commodities, ESG and Emerging Markets (EMEA), discusses the reverberations of these tariff increases across the sustainability complex, wherein he believes that batteries and battery energy storage systems (BESS) are particularly exposed to the new tariffs given the limits to domestic US manufacturing.

Trump’s Tariff-palooza: Macro & Market Impacts…

George Goncalves, Head of Macro Strategy in the Americas, walks us through the latest tariff developments and potential implications for the economy and markets. As a reminder, a palooza is informally viewed as a large frenzied event, thus it’s apt to call this latest version a “tariff-palooza” as markets got jolted by the larger than expected and broad-based announcement on “Liberation Day.” Although the approach the administration has taken a tougher stance on fiscal spending and trade negotiations, it is directionally in line with our 2025 Outlook, given all the uncertainty that this latest tariff rounds have had on both investors and corporate America, unless the tariffs are not fully binding and or get negotiated away quickly, the recent volatility has raised our recession risks.
 

What has been the impact of Trump’s tariff war in the FX market?

Lee Hardman, Senior Currency Analyst, and Jack Greenslade of UK, Ireland, Switzerland and Middle East Corporate Sales, discuss the impact of President Trump’s tariff plans for the FX market. Will an escalating trade war lead to further strength for safe haven currencies such as the yen?
Disclaimer: www.mufgresearch.com (PDF)

Reciprocal tariff plans are not fully priced

The US dollar is weaker this week against most G10 currencies ahead of the key reciprocal tariff announcement on 2nd April. Derek Halpenny, Head of Research Global Markets EMEA & International Securities talks to Shan Husain Institutional FX Sales EMEA about how the markets are positioned ahead of the announcement and what we can expect in the days and weeks following. Derek suggests financial markets are possibly overly optimistic about the potential impact.
 
Disclaimer: www.mufgresearch.com (PDF)

Navigating "secondary tariffs" in global energy markets

US President Trump has threatened to impose “secondary tariffs” at a rate of 25% on countries that purchase crude oil from Venezuela, aiming to stymie its oil trade with other nations. The move is seen as a novel dimension in the new US administrations policy toolkit to use as leverage in achieving its foreign and domestic policy goals.
Ehsan Khoman, Head of Research – Commodities, ESG and Emerging Markets (EMEA), discusses the reverberations of these “secondary tariffs” and offers reasons to believe why the gravitational tilt for oil prices remains to the downside despite the risks of a removal of crude barrels from global oil markets.

What are the main takeaways for the FX market from this week's central bank updates?

Lee Hardman, Senior Currency Analyst, and Seiko Kataoka-Fisher, Director from Japanese Customer Sales for EMEA in London, discuss the latest policy updates from the Fed, BoJ, BoE. How is heightened uncertainty related to President Trump's policy plans impacting central bank communication?
Disclaimer: www.mufgresearch.com (PDF)

Tariffs, inflation expectations and the outperformance of commodities

Uncertainty about US policy, especially trade policy, has contributed to substantial rises in inflation uncertainty and in the University of Michigan’s measure of long-term US household inflation expectations, which has risen to the highest since 1995.
Ehsan Khoman, Head of Research – Commodities, ESG and Emerging Markets (EMEA), believes that as tariff threats, inflation expectations and inflation uncertainty rise further, commodities act as a critical inflation hedge as physical assets historically deliver strong real returns when inflation rises, while equity and bond real returns tend to be negative.