The MUFG Global Markets Podcast

Cross-border securities flows hit record levels ahead of BOJ Leadership Change – The MUFG Global Markets Podcast

JGBs have sold-off while changes to USDJPY and JPY basis have been relatively limited. The Bank of Japan’s March Tankan survey showed business sentiment worsened only slightly, as the jitters over the US and European banking sectors have not yet spread to Tokyo. However, the Nikkei Average is up only slightly as foreign investors unload Japan shares simply because they are a risk asset. Cross boarder bond flows have been massive in the Tokyo market.
In today’s episode, MUFG Chief Japan Strategist Takahiro Sekido review JPY assets and securities flows in March and also looks ahead to triggers for April. He also shares his views on spot USDJPY, Yen rates, and Yen basis.
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Can JPY weakness be sustained while USD weakens further? The Global Markets FX Week Ahead Podcast

We end the week for the first time since early March without any elevated investor concerns over the health of banks. The calming of investor concerns has seen US yields rebound but the FX response has been mixed.
Derek Halpenny, Head of Research, Global Markets EMEA and International Securities, discusses the FX impact of easing banking sector concerns with Simon Mayes, Head of UK, Ireland and Swiss Corporate Sales. Derek also looks ahead to next week and the potential rates and FX implications of the US jobs report at the end of the week.
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Japanese markets and investors have weathered banking’s crisis of confidence well so far – The MUFG Global Markets Podcast

Dollar / Yen is well supported and judging from the speed of the reversal of yen rate declines and yen basis widening, the spread of risk from US and European financial unease to the Tokyo market has been limited. The market may have avoided major turmoil at the end of the fiscal year, but cross-asset flows and markets still need to be monitored for signs of stress.
In today’s episode, MUFG Chief Japan Strategist Takahiro Sekido evaluates the current state of the market after the outbreak of financial unease in Europe and the United States, and discusses US TIC and JSDA securities investment flow data. He also shares his views on spot USDJPY, Yen rates, and Yen basis.
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Banking fears trigger sharp reassessment of Fed policy outlook: The Global Markets FX Week Ahead Podcast

Lee Hardman, Senior Currency Analyst, and Michael Owen, Head of Global Client Desk EMEA, discuss the loss of confidence in the banking system and how it is impacting central bank policy. Will the USD continue to weaken in response to banking fears?
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Japanese markets react to a crisis of confidence in banks overseas as central banks outside of Japan continue to battle inflation: The MUFG Global Markets Podcast

Japan’s markets have reacted to the banking issues in the U.S. and Europe in classic financial crisis/risk aversion fashion, with JPY rallying, JPY rates falling, and JPY basis widening. Japanese investors are passively watching the credit jitters in the U.S. and European banking sector, but they are being impacted considerably, given their sizeable stock overseas assets suggesting they will be monitoring global financial markets closely.
In today’s episode, MUFG Chief Japan Strategist Takahiro Sekido shares his views regarding the credit concerns in the U.S. and European financial sector and his outlook for JPY cross assets and discusses the collaboration among six central banks for boost USD liquidity funding. He also shares his views on spot Dollar/Yen, Yen rate, and Yen basis.
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FOMC’s New Balance of Risks: Inflation vs. Banking Issues: The MUFG Global Markets Podcast

George Goncalves, MUFG Head of U.S. Macro Strategy, returns to discuss the new risks facing financial markets and how the Fed will handle the current inflation backdrop, while dealing with renewed bank issues. George reviews two of his recent reports, one focused on the financial system’s plumbing and liquidity dynamics and the other on his March FOMC preview. Listeners will recall that our house view has been that the Fed can raise rates as high as they like, but the criteria to stop matters more than where they settle at, while at the same time the more they hike, the likelihood that they break something in the markets or the economy or both where high.
We argue that the criteria to stop hiking is surfacing and that the hiking cycle may be close to being over. The tightening of financial conditions and credit standards post the recent bank failures, along with the long and variable lags of the prior hikes in the system (which are clearly leaving a dent on the financial markets) will likely result in the upcoming recession being ushered in sooner. This makes the upcoming FOMC meeting decision a much closer call as a result.
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Elevated risks ahead of FOMC and BoE meetings: The Global Markets FX Week Ahead Podcast

Risk sentiment has continued to deteriorate. Derek Halpenny, Head of Research, Global Markets EMEA and International Securities, discusses with Shan Husain, Vice President FI FX Sales, the concerning deterioration in investor sentiment into the end of the week despite numerous steps taken by the authorities in the US and Europe to restore confidence in the banking sector.
Derek also looks ahead to the implications of this uncertainty for the FOMC and BoE policy meetings next week and speaks about currencies that are set to perform best if current market conditions persist or deteriorate further.
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Kuroda’s last policy meeting is overshadowed by the collapse of Silicon Valley Bank: The MUFG Global Markets Podcast

The Bank of Japan’s decision to stay the course at its March meeting was the calm before the Silicon Valley Bank collapse’s storm. Over the near term, market participants will remain on guard and USDJPY and JPY rates will inevitably fall. JPY basis could be mixed, depending on duration.
In today’s episode, MUFG Chief Japan Strategist Takahiro Sekido reviews the BoJ’s March Monetary Policy meeting, discusses his expectations regarding the government-BoJ joint statement as well as his outlook for BoJ monetary policy. He also shares his views on spot Dollar/Yen, Yen rate, and Yen basis.
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Safe-haven currencies supported by hawkish Fed rhetoric: The Global Markets FX Week Ahead Podcast

Lee Hardman, Senior Currency Analyst, and Seiko Kataoka-Fisher, Vice President of Japanese Customer Sales for EMEA in London, discuss the fallout for the FX market from Fed Chair Powell’s semi-annual testimony and fresh concerns over the health of US regional banks.
They also discuss whether the Fed will step up the pace of hikes later this month?
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Kuroda’s last policy meeting is likely a non-event, but what if it isn’t? The MUFG Global Markets Podcast

USDJPY has stopped rising while 10-year JGB yields remain stuck at 0.50%. The Nikkei Average is up and risk sentiment is positive. Japanese investors have been rebuilding their foreign bond positions ahead of the end of fiscal year 2022. Japanese investors’ foreign bond flows are stronger than JPY bond flows among foreigners.
In today’s episode, MUFG Chief Japan Strategist Takahiro Sekido previews the March Bank of Japan Monetary Policy Board meeting and shares his outlook for JPY rates in March. He also shares his views on spot Dollar/Yen, Yen rate, and Yen basis.
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Event Risks Lie Ahead: The Global Markets FX Week Ahead Podcast

After a choppy and largely directionless week in the FX markets, Derek Halpenny, Head of Research Global Markets EMEA and International Securities talks to Jack Greenslade, Associate in the Global Markets Sales Division, about the conflicting macro forces that have kept the US dollar in check. They also look ahead to next week and beyond to assess the potential direction of the dollar, as well as the possible impact of the National People's Congress on Sunday, Jay Powell's semi-annual testimony on Tuesday and Governor Kuroda's last monetary policy meeting next Friday.
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What does an Ueda-led Bank of Japan mean for Japanese financial markets? The MUFG Global Markets Podcast

The spotlight has been on the vetting process for the Bank of Japan leadership nominees in the Diet since last Friday. The process has been smooth so far, and USDJPY has not been volatile but outgoing BoJ Governor Haruhiko Kuroda could still spring a surprise at his last Monetary Policy Board meeting in March.
In today’s episode, MUFG Chief Japan Strategist Takahiro Sekido shares his impressions of the BoJ leadership nominee hearings and considers the implications for JPY basis and JPY rates. He also shares his views on spot Dollar/Yen, Yen rate, and Yen basis.
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How have Fed and BoJ policy expectations helped to lift USD/JPY? The Global Markets FX Week Ahead Podcast

Stronger activity data and firm inflation data is triggering a hawkish repricing in global rate markets. Lee Hardman, Senior Currency Analyst, and Simon Mayes, Head of UK, Ireland and Swiss Corporate Sales, discuss whether the USD will continue to rebound alongside rising US yields. Did incoming BoJ Governor Ueda open the door for further USD/JPY upside?
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The return of a key driver of USD strength? The Global Markets FX Week Ahead Podcast

This week was the third consecutive week of strength for the US dollar (DXY basis) and Derek Halpenny, Head of Research Global Markets EMEA and International Securities, talks to Shan Husain, Vice President FI FX Sales, about the drivers of the FX move including the US CPI and other data this week and the continued hawkish rhetoric from Fed officials.
Derek also looks ahead and assesses the FX outlook, including the pound after the UK CPI data.
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Markets are realizing that it’s too soon to claim victory on inflation: The MUFG Global Markets Podcast

George Goncalves, MUFG Head of U.S. Macro Strategy, walks us through the worse than expected January CPI inflation report and the market’s reaction. In general, we view the repricing of rates as appropriate but continue to be perplexed on the easing that remains for broader financial conditions. With the month at the half-way point, and overall economic data painting a picture that inflationary pressures still linger, the upcoming FOMC minutes from the January meeting might shed light on what the committee is thinking. Net as we have said before, it’s not about what level the Fed gets to, but what are the conditions needed for them to stop hiking altogether.
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Amamiya, now I really know, my my, I could never let you go – The MUFG Global Markets Podcast

The announcement of the nominations for the new Bank of Japan leadership has been slow to materialize, but the nomination should be formally announced by the time this episode is published. Given it is likely that LDP political considerations have already been resolved we expect the Diet approval process to be quick. Are higher Dollar/Yen, Yen rates, Nikkei stock prices and wider Yen basis a good sign for the next Governor?
In today’s episode, MUFG Chief Japan Strategist Takahiro Sekido discusses the BoJ leadership nomination, cross border securities flows and shares his views on spot Dollar/Yen, Yen rate, and Yen basis.
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Inflation data a key test for market optimism: The Global Markets FX Week Ahead Podcast

US yields have stabilised following a post-US jobs jump last Friday and Monday with a wave of Fed official comments failing to extend yields further higher. Derek Halpenny, Head of Research Global Markets EMEA & International Securities,  discusses with Michael Owen, Head of Global Client Desk EMEA, the implications of this for the US dollar while looking ahead to the key US CPI data next week.
Derek also discusses the impact on the Swedish krona  after the Riksbank meeting and the outlook for the pound ahead of a busy week of economic data releases.
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Turnover Limbo and the Lock-In Effect: How Low Can It Go: The MUFG Global Markets Podcast

In today’s episode, MUFG Head of Prepayment Modeling and Strategy, Glenn Schultz discusses the lock-in effect, turnover, and existing home sales. He also considers if the lock-in effect is overstated and the relative value implication for new production discount mortgage backed securities.
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Repricing of rates while other asset classes focus strictly on soft landing: The MUFG Global Markets Podcast

George Goncalves, MUFG Head of U.S. Macro Strategy, recaps the price action post the FOMC and the strong, more like wow, reading from the latest jobs report. George believes the rates market is normalizing to the idea that the Fed is “not done” and will likely be on hold for longer at higher rates, as well. That said, longer-term rates investors remain skeptical about the current state of the economy and the ability of the Fed to maintain rates elevated, or at a minimum, or are using long duration as a hedge to a potential financial accident and/or exogenous shock ahead.
Meanwhile, if the next inflation reading declines less than expected, or worse, hints that the services side inflation remains “sticky” that could result in further repricing ahead, where that would not only hit rates but broader financial assets as well, like credit and equities. Overall, we continue to view the recent bounce as a bear market rally.
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Will the BoJ’s master architect of non-traditional monetary policy design a way out?: The MUFG Global Markets Podcast

Dollar/Yen is up following media reports that current Bank of Japan Deputy Governor Masayoshi Amamiya will be nominated as the next head of the central bank. Yen rates are stable, as traders appear to be awaiting the formal announcement. The Chinese Lunar New Year holidays are over, and Yen asset trading among Asian investors has picked back up. 
In today’s episode, MUFG Chief Japan Strategist Takahiro Sekido discusses recent media reports about BoJ leadership nominations and shares his outlook across markets in February. He also shares his views on spot Dollar/Yen, Yen rate, and Yen basis.
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How are FX markets responding as central banks move closer to the end of their hiking cycles? The Global Markets FX Week Ahead Podcast

Lee Hardman, Senior Currency Analyst, and Seiko Kataoka-Fisher, Vice President of Japanese Customer Sales for EMEA in London, discuss the main takeaways from this week’s central bank policy updates.
Seiko and Lee will also discuss risks for the JPY from the government’s upcoming announcement about the next BoJ governor.
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New BoJ leadership to represent change the shift from Abenomics to Kishida’s New Style of Capitalism: The MUFG Global Markets Podcast

Dollar/Yen has been trading around 130, and Yen rate volatility has eased with the BoJ’s December surprise a thing of the past after the bank held the line in January. All eyes are on potential nominees for BoJ leadership.
In today’s episode, MUFG Chief Japan Strategist Takahiro Sekido discusses what to watch during the fiscal year 2023 ordinary Diet session, the nomination process for the next BoJ governor and deputy governors, the shift from Abenomics to the Kishida Administration’s New Style of Capitalism, and implications for markets. He also shares his views on spot Dollar/Yen, Yen rate, and Yen basis.
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Fed hawkish surprise required to trigger FX move: The Global Markets FX Week Ahead Podcast

The US dollar has rebounded modestly as the week comes to an end, ahead of some key events next week. Derek Halpenny, Head of Research, Global Markets EMEA and International Securities, talks to Simon Mayes, Head of UK, Ireland and Swiss Corporate Sales, about the outlook for the FX markets ahead of the FOMC meeting and whether this key event may trigger a turn stronger for the dollar.
Derek also provides his view on the ECB and BoE meetings which also take place next week.
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U.S. Markets: 2023, a strong start, can it last?: the MUFG Global Markets Podcast

George Goncalves, MUFG Head of U.S. Macro Strategy, argues that the latest price action, as positive and powerful to the upside that it has been, has skewed perception of the macro outlook. Granted, it’s likely that some positive factors – mostly the weather in Europe and contained energy, plus China reopening – have improved the outlook, these alone won’t be enough to overcome the cumulative effective of global central bank tightening and ongoing draining of liquidity via various forms of QT.  In the end, it’s likely yet again another short-term bear market rally in risk assets.
Meanwhile, rates markets continue to defy the Fed and where policy rates will eventually stabilize at. These inconsistencies matter and could also drive Fed thinking. Chair Powell might remind investors that their policies work through tightening financial conditions. We expect a “hawkish” 25bps hike at the next meeting.
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