The MUFG Global Markets Podcast

JGBs rallied, Yen basis widened, and the Yen weakened in the aftermath of the Bank of Japan’s January Monetary Policy Board meeting. The surprise decision at the December BoJ meeting stoked speculation in the market about further changes this week. Ultimately, the BoJ stood pat but announced some enhanced lending capabilities that could prove significant. 
In today’s episode, MUFG Chief Japan Strategist Takahiro Sekido reviews the January BoJ policy meeting, shares his outlook for monetary policy going forward, and discusses cross-border securities investing flows during December. He also shares his views on spot Dollar/Yen, Yen rate, and Yen basis.

Lee Hardman, Senior Currency Analyst, and Matthieu Gloux, Head of Global Client Sales in EMEA, discuss why fundamental drivers are creating a more compelling case for a weaker USD at the start of the new calendar year.
Will USD weakness be reinforced by next week’s BoJ policy update?
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In today’s episode, MUFG Head of Prepayment Modeling and Strategy, Glenn Schultz reviews December’s remittance data and addresses the question: are we in the winter of prepayment or are the slow speeds just turnover? He also discusses relative value across the specified pool and derivative markets.
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George Goncalves, MUFG Head of U.S. Macro Strategy still thinks it’s a macro-driven year ahead. The economic backdrop continues to worsen in the first half, and it’s possible that the recession hits sooner. The good news – U.S. inflation should continue to decline. By mid-year, the shift from inflation to growth concerns should result in a short-lived Federal Reserve (Fed) pause, and then easing by year-end. However, markets are already pricing to such an outcome on day one! The risk is that instead we get one last major sell-off at the start of 2023 as global rates rise (driven by other central banks – notably the BoJ and ECB along with supply concession). And we also think that risk markets (i.e. stocks) have yet to make their final low, too. While we wait to get clarity on the outlook for the economy, earnings, and risk assets, we make the case to dollar-cost average into bonds. We like L/T USTs/MBS on dips more so than credit, for now. For further information please also see the executive summary of our 2023 Macro2Markets Outlook titled Passing the Baton: A shift from inflation to growth concerns.  
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The Bank of Japan’s surprise monetary policy decision in December hastened a sell-off in the JGB market, a drop in Dollar/Yen, and a tightening of Yen cross-currency basis. The government’s FY23 budget has grown to JPY114 trillion causing upward pressure on JPY rates to likely persist. We suggest investors watch not only BoJ JGB purchases but also BoJ lending and pooled collateral operations. 
In today’s episode, MUFG Chief Japan Strategist Takahiro Sekido dissects the December BoJ meeting, the monetary operations that followed, and what he expects going forward. He also shares his views on spot Dollar/Yen, Yen rate, and Yen basis.
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Data from the US at the end of the first week of 2023 has raised fears of recession in the US.
Derek Halpenny, Head of Research Global Markets EMEA and International Securities talks to Michael Owen, Head of Global Client Desk EMEA, about the implications for the US dollar and Fed policy following the jobs and ISM data. Derek also highlights some of the key takeaways from the Annual Foreign Exchange Outlook publication, released today, in relation to FX forecasts for the year ahead and what will be some of the key drivers for FX in 2023.
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Lee Hardman, Senior Currency Analyst, discusses the main drivers of the FX market in 2022 and looks ahead to next year. Will the USD be able to hold on to this year’s gains? 
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In the final full week of trading of the year, the BoJ surprised the market with a change in policy. Derek Halpenny, Head of Research, Global Markets EMEA and International Securities, discusses with Simon Mayes, Director of MUFG’s Global Customer Marketing Group for EMEA in London, the implications of the BoJ’s announcement for monetary policy and the yen in 2023.
Derek also looks ahead to Q1 and what might be in store for the US dollar. At the end of the year, Derek also looks back at the trade recommendations over the year.
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A busy week of central bank policy meetings before the end of the year saw the ECB steal the Federal Reserve’s thunder by providing a far more hawkish communication than expected. Derek Halpenny, Head of Research Global Markets EMEA and International Securities, discusses with Michael Owen, Head of Global Client Desk EMEA, what the rates and FX implications will be following the FOMC and ECB meetings.
Derek also looks ahead to the BoJ policy meeting next week and assesses the prospect of a change in the Yield Curve Control policy and implications for the yen.
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In today’s episode, MUFG Head of Prepayment Modeling and Strategy Glenn Schultz wraps up 2022 prepayment and reviews our major themes for the year and how they played out versus our expectations. Looking forward into 2023, Glenn discusses the outlook for prepayment, along with the PO value of the discount agency MBS sector and its place in investor portfolios. 
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In this episode, MUFG Head of U.S. Macro Strategy George Goncalves walks us through what we collectively observed from the second weak inflation print in a row, and what to expect ahead on that front. George views the markets have this tendency to pull forward returns, and the latest price action is emblematic of such performance. Finally, George gives his base case on what to look for at the upcoming FOMC meeting. Bottom line, although with each subsequent FOMC meeting we are getting closer to the end of the hiking cycle, we do not expect chair Powell to signal as such.
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Dollar/Yen has rebounded from the lows while super long term JGBs have been volatile. The front end of the USDJPY basis curve continues to tighten while the long end has widened. The Kishida Administration has announced tax hikes and a bigger defense budget, which could increase volatility in the JGB market. Japanese investors also face challenges with managing their JGB and USDJPY positions ahead of year-end.
In today’s episode, MUFG Chief Japan Strategist Takahiro Sekido reviews Japanese lifers first half fiscal year 2022 earnings and connects them to October securities flow data. He also shares his views on spot Dollar/Yen, Yen rate, and Yen basis.
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Lee Hardman, Senior Currency Analyst, and Shan Husain, Vice President, FI FX Sales, discuss how the busy economic calendar in the week ahead could prove pivotal for FX market performance through the rest of this year.
Will the latest US CPI report and FOMC meetings shake up financial markets?
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JGB yields have been little changed as of late, while in contrast, spot Dollar/Yen has fallen sharply, and Yen cross-currency basis has tightened off the wides. Japanese investors have been unloading their foreign bond holdings, while demand for JPY bond asset swaps has been strong among foreigners, which has caused price action into the end of the year to be a little unusual.
In today’s episode, MUFG Chief Japan Strategist Takahiro Sekido reviews 2022 and gives his outlook for 2023, including changes in JGB issuance. He also shares his views on spot Dollar/Yen, Yen rate, and Yen basis.
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The week is closing out with some modest US dollar strength after further selling this week fuelled by Fed Chair Powell’s speech on Wednesday. Derek Halpenny, Head of Research for Global Markets EMEA and International Securities, discusses with Chris de Sibert, Head of Institutional Investors FX Sales for EMEA, the implications of Powell’s speech for the dollar going forward.
Derek also discusses the seasonal bias for EUR/USD in December and looks ahead to next week when the Reserve Bank of Australia and the Bank of Canada will kick-start a busy month of central bank policy meetings.
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In today’s episode, MUFG Head of U.S. Macro Strategy George Goncalves reviews the recent price action as November comes to a close. Markets have been relatively tame in the last few weeks versus what has been characterized as a volatile environment for the majority of 2022. George thinks that the tranquility in markets won’t last much longer, at least for the first half of December. George discusses the key events that lie ahead as we look to wrap up this tough year for markets. The risk for illiquidity are high as investors potentially fine tune portfolios and asset allocations. 
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Dollar/Yen has started to trend downward, trading on either side of the 140-mark. JGB yields have been stable thanks to the Bank of Japan’s yield control operations, while cross-currency basis has tightened amidst foreigners' asset swap buying and Japanese investors' foreign bond selling. It is unusual for Dollar/Yen basis to tighten significantly ahead of year end, but 2022 has been an unusual year in many respects and basis is no exception.
In today’s episode, MUFG Chief Japan Strategist Takahiro Sekido discusses the September USTIC and October JSDA, along with MoF investing flows data. He also shares his views on spot Dollar/Yen, Yen rate, and Yen basis.
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Lee Hardman, Senior Currency Analyst, and Matthieu Gloux, Head of MUFG’s Global Client Sales for EMEA, discuss the USD’s latest sell-off ahead of a keynote speech from Fed Chair Powell in the week ahead.
Will the return of COVID risks in China provide much needed support for the USD?
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The focus in the FX markets toward the end of the week was on the Pound after the Autumn Statement. Did the new government do enough to reverse the recent loss of credibility? Derek Halpenny, Head of Research, Global Markets EMEA and International Securities, discusses with Simon Mayes, Director of MUFG’s Global Customer Marketing Group for EMEA in London, the implications of the Autumn Statement for BoE monetary policy and the Pound.
Derek also discusses the early ECB Targeted Longer-Term Refinancing Operations (TLTRO) repayment and looks ahead to the Riksbank and RBNZ policy meetings next week.
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In today’s episode, MUFG Head of U.S. Macro Strategy George Goncalves discusses the recent price action around the CPI and PPI readings and puts that into context relative to the latest thinking on the Fed. George says we should take the Fed at face value until they decide to signal or officially offer forward guidance on policy objectives. That means that it’s still premature to suggest they are about to pause, and with USTs still sub where the Fed may still end up pushing up rates, George suggests that buying dips and potentially dollar-cost-averaging into fixed income is still the prudent course of action. Meanwhile, George does not think the bond market will take out all of the 2023 rate hikes – at least not between now and year-end – until the Fed gives more forward guidance.
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Dollar/Yen and Yen rate have fallen from the highs while cross-currency basis has tightened and the Nikkei Average continues to recover. The front end of the JGB yield curve stabilized after the government announced it will increase issuance of JGBs to fund Prime Minister Kishida’s second supplementary budget. Separately, Japanese bank and life insurance companies are releasing their H1 FY22 earnings results, which include details of losses incurred on foreign bond holdings in the recent global bond market rout.
In today’s episode, MUFG Chief Japan Strategist Takahiro Sekido reviews cross border security investment flows during September and October and sets forth his outlook for the month of November. He also shares his views on spot Dollar/Yen, Yen rate, and Yen basis.
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After a drop of over 5% for the US dollar this week, Derek Halpenny, Head of Research Global Markets EMEA and International Securities, talks with Michael Owen, MUFG’s Head of Global Client desk for EMEA in London, about the primary driver of the move – the weak US inflation data, and what this means for the US dollar. Might we have seen the ‘three peaks’ for inflation, rates and the US dollar?
Derek also looks ahead to the UK budget announcement on 17th November and the implications for the Pound.
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In today’s episode, MUFG Head of Prepayment Modeling and Strategy Glenn Schultz discusses the October remittance data and outlines our views with respect to winter seasonal turnover prepayment, 2023 issuance, and investors’ search for convexity in the agency MBS. He also discusses the use of machine learning to identify unique convexity profiles, and how investors may leverage machine learning to create excess risk adjusted returns in the agency MBS market.
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USDJPY has come off the highs as of late. Freight shipping rates and resource prices have started to slip ahead of Thanksgiving, and tight logistics conditions are loosening somewhat despite the persisting stresses of the war in Ukraine. At the same time market pricing has begun to shift and speculation that BoJ Governor Kuroda may change his policy stance has increased.
In today’s episode, MUFG Chief Japan Strategist Takahiro Sekido discusses the impact of the MoF’s currency intervention and BoJ monetary operations on the flow of money, as well as what to watch with regards to monetary and fiscal policy. He also shares his views on spot Dollar/Yen, Yen rate, and Yen basis.
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