The MUFG Global Markets Podcast

Lee Hardman, Currency Analyst, and Seiko Kataoka-Fisher, Vice President, Japanese Customer Sales for EMEA in London, discuss the main take away from Fed Chair Powell’s keynote speech at Jackson and the impact on the outlook for the USD.
Seiko and Lee will also discuss why higher rates in Europe are failing to support the EUR and GBP.
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The optimism over declining inflation looks to be ebbing away fast. This week, Derek Halpenny, Head of Research Global Markets EMEA & International Securities, talks to Martin Viohl, Director of the Global Customer Market Group in London, about what factors were behind this deterioration in optimism over the outlook for inflation and whether the US dollar can sustain the rebound seen this week going forward.
Derek also looks ahead to next week when the Jackson Hole Symposium will be the highlight of the week but some focus will also be on the ECB minutes and the OFGEM price cap announcement.

In today’s episode, MUFG Head of U.S. Macro Strategy George Goncalves continues to suggest that the markets’ belief that the Fed has or is about to pivot is just wishful thinking and is more a narrative being used to explain the markets performance as of late. George thinks that inflation remains the Fed’s main focus. Even if the assumption is that the peak in headline inflation is behind us, so long as core PCE inflation stays elevated, it’s a binding constraint for them. Thus those in the marketplace expecting the Fed to dial back its hawkishness and/or eventually flip into easing in 2023 might be getting ahead of themselves.
In many ways George suggests the recent financial conditions easing during the summer of 2022 will require the Fed to lean further into tightening if they truly want to become restrictive. We expect rates to get deeper into the 3% range for the base rate soon and if max-QT in September/October does not result in a material tightening of financial conditions, the Fed may have to lean even harder to get their desired results on reigning in core inflation via slowing down aggregate demand. At a minimum the longer it takes for inflation to get to the Fed’s 2% target, it’s likely they don’t pivot but instead pause at a higher rate level.
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Spot Dollar/Yen, Yen rate, and cross-currency basis have behaved well as of late, and we expect this to continue. The Nikkei Average has reversed course and rallied reflecting an improvement in risk sentiment. Separately Prime Minister Fumio Kishida has reshuffled his Cabinet early. 
In today’s episode, MUFG Chief Japan Strategist Takahiro Sekido reviews Japanese investor activity in foreign markets as reflected in Japanese Ministry of Finance data. He also shares his views on spot Dollar/Yen, Yen rate, and Yen basis.
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After a weaker than expected US CPI print this week, Derek Halpenny, Head of Research Global Markets EMEA and International Securities explains to Matthieu Gloux, Head of Global Client Sales EMEA, why the data itself might not have much significance for the financial markets over the near-term. Derek also looks back at 2s10s curve inversions to assess equity and FX performances. The US dollar is set to strengthen further from here with the Fed’s battle with inflation far from won.

In today’s episode, MUFG Head of Prepayment Modeling and Strategy Glenn Schultz reviews the July prepayment data, burnout in the moderately seasoned cohort and its implication for refinance risk in the new production cohorts, as well as the agency MBS basis relative value outlook.
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In today’s episode, MUFG Head of U.S. Macro Strategy George Goncalves reviews the market price action post the strong July NFP report and what to look out for in the upcoming CPI report. At a minimum, the latest NFP report has made market participants put the “Fed pivot” concept on the backburner as the ongoing robust job growth, along with higher wage inflation, suggests that the Fed will have to lean harder to tightening monetary conditions to weaken aggregate demand.
Meanwhile, George believes that markets will start to focus more on core inflation versus headline, which historically has been more volatile. Lastly, markets remain on edge, but once we get past this week’s CPI report and bond supply, it’s possible that the summer lull sets in with rates grinding out to potentially slightly lower rates. However, George suggests that investors should stay focused and expect an active market once activity picks up in September.  
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Neither Dollar/Yen FX, JGBs, or Yen cross-currency basis have moved much as of late, ahead of the lull of the Obon summer holiday. Separately, recent torrential rains and flooding damage in Niigata and Yamagata prefectures highlight the great dangers of climate change and the need for the BoJ’s climate change operations.
In today’s episode, MUFG Chief Japan Strategist Takahiro Sekido reviews cross-border security flows and changes to the monetary base during the month of July. He also shares his view on spot Dollar/Yen, Yen rate, and Yen basis.
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This week, Lee Hardman, Currency Analyst, and Reza Nasehi, Vice President of the Japanese Client Sales Group for EMEA in London, discuss the main triggers for the USDs bounce back over the past week, and whether it is likely to extend further into the week ahead.
Reza and Lee will also discuss if the flare up in geopolitical tensions between the US and China over Taiwan will have any implications for FX markets. 
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In today’s episode, MUFG Head of U.S. Macro Strategy George Goncalves explains that the broader markets are increasingly more concerned about recessions and growth versus just focused on inflation, however the Fed has not taken its eye off of the elevated levels of inflation. Thus it’s too early for markets to force a pivot and rally on bad news, as if the Fed would come to the rescue and stop hiking and/or ease.
We think a couple more hikes are in store for 2H22 and that should keep curves inverted and eventually weigh on other asset classes, too. We briefly highlighted our views from a joint publication with the capital markets team on a piece called “Mixed Signals: An Assessment of US Recession Risk in the Year Ahead” reviewing our take on recessions and the signals we use to assess them.  
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JPY rose, JPY rates declined, and JPY basis tightened in July, reversing their trends of April through June. The BoJ made no changes following the assassination of former Prime Minister Abe just ahead of the Upper House elections. In August, we expect external factors to impact JPY rates and basis during the Obon holidays.
In today’s episode, MUFG Chief Japan Strategist Takahiro Sekido reviews markets in July including the BoJ’s July Monetary Policy Board meeting and discusses potential JPY trading triggers for August. He also shares his views on Dollar/Yen, Yen rate, and Yen basis.
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Lee Hardman, Currency Analyst, and Michael Owen, MUFG’s Head of Global Client desk for EMEA in London, discuss the recent correction lower for the USD. Has the USD reached a bearish turning point?
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In today’s episode, MUFG Head of U.S. Macro Strategy George Goncalves provides an update on his latest views. George believes that market participants are in a tug-of-war on the inflation versus recession debate and are hoping that central banks will start to pivot their focus to recession risks versus inflation. Even if that is what will ultimately happen, George feels that it’s too soon for that to be the prevailing theme because the Fed is only now getting toward neutral levels of rates.
Listen to the podcast to hear George's base case for the upcoming July FOMC with expectations of one more 75bp hike in rates with chair Powell delivering a neutral message.
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So far in July, USDJPY, the 10Yr JGB yield, and the Nikkei Average have all stayed in a flat range, while JPY basis has remained wide. With the risk of a global economic slowdown being questioned, developments in G10 bond markets have impacted Japanese investors’ overseas bond flows, while foreign investor behavior in the JGB market is also being affected.
In today’s episode, MUFG Chief Japan Strategist Takahiro Sekido discusses his July outlook for JPY cross assets and Japanese investor behavior based on the June Tankan survey, and reviews BoJ and MoF money flow data for June. He also shares his views on Dollar/Yen, Yen rate, and Yen basis.
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It has been a dramatic week at Westminster, culminating in Boris Johnson resigning as Prime Minister. Lee Hardman, Currency Analyst, and Simon Mayes, Director of MUFG’s Global Customer Marketing Group for EMEA in London, discuss implications for the pound, and what’s behind the USD’s renewed upward momentum.
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The USD has corrected lower over the past week alongside lower US yields and a rebound in global equity markets. Lee Hardman, Currency Analyst, and Simon Mayes, Director of MUFG’s Global Customer Marketing Group for EMEA in London, discuss whether the best days are over for the USD rally ahead of next week’s FOMC meeting.
They also look at implications for the EUR from this week’s ECB’s policy update.
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Japan remains in mourning after the shock of former Prime Minister Abe’s shooting. Recently USDJPY made new highs and JPY basis widened slightly while 10Yr JGB yield has stayed just below the upper band of the BoJ’s target. Despite the depreciation of the Yen exporter operations have not strengthened because of supply chain constrictions, while the impact on import prices has been significant. The culprit behind the rise in USDJPY has been net imports in the resource account while foreigners’ Yen short positions have not changed much.
In today’s episode, MUFG Chief Japan Strategist Takahiro Sekido shares his views ahead of the Bank of Japan’s July meeting. He also discusses inflation in Japan and shares his views on Dollar/Yen, Yen rate, and Yen basis.
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With EUR/USD breaching parity this week and the Fed expected to maintain its hawkish stance given stubbornly high inflation, the 2s10s US Treasury curve has inverted further. This week Derek Halpenny, Head of Research for Global Markets EMEA and International Securities, discusses with Michael Owen, Head of Global Client Desk EMEA, the implications for the US dollar in periods of curve inversion.
Derek also looks ahead to the ECB meeting next week and addresses a client question on the possibility of the G20 turning its attention to curtailing US dollar strength.
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In this episode, MUFG Head of Prepayment Modeling and Strategy Glenn Schultz discusses recent prepayment data and shares his views on valuation across the agency MBS coupon stack. He also reviews the recent slowdown in the U.S. housing market and the outlook for the housing market against the backdrop of a higher 30-year mortgage rate. Finally, Glenn takes listeners through the outlook for agency MBS issuance for the second half of the year and the mortgage basis.
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In today’s podcast, we mark-to-market the latest macro developments in the U.S. and recent price action, as well as briefly review some of the inflation concepts covered in our recent monthly strategy report. 
We also touch upon what to expect from markets post the June CPI report. In our view, if the inflation report does not show any signs of price increases slowing, then a high reading may trigger a more lasting risk-off as investors potentially throw in the towel on inflation moderating.
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Voting for the Upper House elections got underway following the shocking and tragic assassination of former Prime Minister Shinzo Abe last week. The ruling Liberal Democratic Party of Japan scored a big victory in the elections. Over the near term, the Kishida Administration will likely focus on inflation countermeasures. At the same time, security issues both domestic and abroad will also be key policy issues.
In today’s episode, MUFG Chief Japan Strategist Takahiro Sekido discusses implications for financial markets from Upper House election results, the impact on the Bank of Japan’s yield control operations, and securities investing flows in May and June. He also shares his views on spot Dollar/Yen, Yen rate, and Yen basis.
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Another extraordinary week has seen some further record moves in rates markets and FX volatility as well. Derek Halpenny, Head of Research for Global Markets EMEA and International Securities, talks with Shan Husain, Vice President, FI FX Sales, about MUFG’s updated FX forecasts published in today’s Foreign Exchange Outlook. Derek explains why MUFG Research is now on “parity watch” as the US dollar continues to strengthen.
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Increased global recession fears fueled some unprecedented moves in rates markets this week and Derek Halpenny, Head of Research Global Markets EMEA and International Securities,  talks to Michael Owen, Head of Global Client Desk EMEA,  about the implications of these moves for the FX markets going forward.
There are plenty of key events next week that could also fuel renewed FX volatility – the G7 summit in Germany, the ECB Forum in Sintra, Portugal, and natural gas prices in Europe all have the potential to influence market direction next week.
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Elevated inflation is prompting G10 central banks to speed up tightening plans, but there is one notable exception - the Bank of Japan. Why is the BOJ not following suit? 
Lee Hardman, Currency Analyst, and Matthieu Gloux, Head of MUFG’s Global Client Sales for EMEA in London, explain and also discuss implications for the FX market from recent central bank policy updates.
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