The MUFG Global Markets Podcast

Are US yields and the USD closer to peaking out?

It has been a more volatile week in the FX market. Lee Hardman, Currency Analyst, and Simon Mayes, Director of MUFG’s Global Customer Marketing Group for EMEA in London, discuss how the sharp sell-off in the US bond market is spilling over into the FX market.
Will the USD continue to head higher alongside US yields in the week ahead?
Disclaimer: www.mufgresearch.com (PDF)

Commodities outlook into year-end

It is exactly 50 years since the Organisation of the Petroleum Exporting Countries (OPEC) imposed an oil embargo on America, turning a modest inflation problem into a protracted bout of soaring prices and economic misery. Now the stagflation of the 1970s – portmanteau of slowing growth and elevated inflation – is reawakening.
In this week’s podcast, Ehsan Khoman, Head of Research – Commodities, ESG and Emerging Markets (EMEA) at MUFG, discusses MUFG’s latest commodities thought leadership report that provides a comprehensive examination into the commodities outlook alongside our updated forecasts – see here for the full report.
Disclaimer: www.mufgresearch.com (PDF)

Rates up, risk down, macro influx (same as it ever was)…

George Goncalves, MUFG Head of U.S. Macro Strategy, walks us through the latest price action where the normalization of rates out the curve has finally caught the attention of broader markets like stocks and credit. The so-called bear steepening of the curve (when long-term rates move higher in yields and in a quantum larger than short-term rate movements) is driving some serious financial conditions tightening. As George says, the bond market is tightening for the Fed. George still believes that the last Fed hike was in July and that all of these volatile market moves will result in them no longer hiking in 2023. That said, until long-term rates find stability (and better yet consolidate into a tradeable range) and until the U.S. dollar stops going up, these major swings may continue in his view. In the past, to see a quick reversal in U.S. Treasuries, there would need to be a much larger and deeper risk-off in stocks and credit. Overall George remains cautious and reminds us that it’s been “the same as it ever was”, higher rates do matter.

USD weakens. What will a government shutdown bring?

The US dollar has corrected weaker into the end of the week. Derek Halpenny, Head of Research Global Markets EMEA & International Securities, talks to Michael Owen, Head of Global Client Desk EMEA, about the factors behind the correction weaker for the dollar and why the government shutdown could reinforce the move over the short-term.
Derek also discusses the latest trade ideas published in the FX Weekly.
Disclaimer: www.mufgresearch.com (PDF)

COP28 expectations with two months to go

Climate negotiators met during New York Climate Week between 17-24 September with the central focus on validating tangible progress on the UN Sustainable Development Goals (SDGs).
After a recent official stocktake confirmed that progress is only on track for 15% of related targets and indicators, the sense of urgency of alignment between businesses, investors and NGOs to future-proof decarbonisation efforts ahead of COP28 in Dubai between 29 November-12 December, was clear in New York.
In this week’s podcast, Ehsan Khoman, Head of Commodities, ESG and Emerging Markets Research (EMEA), discusses the key takeaways from New York Climate Week. He believes that whilst there remained large differences of perspectives on tackling the net zero equation in New York, commonalities emphasising value chain partnerships, infrastructure building and quality reporting were a step in the right direction in working collectively through tackling some of the most pressing climate change challenges.
Disclaimer: www.mufgresearch.com (PDF)

The role of AI in scaling ESG’s maturation

Today’s episode is an excerpt from a recent MUFG webinar hosted by Ehsan Khoman, Head of Research for Commodities, ESG and Emerging Markets (EMEA), and Dr. Tobi Petrocelli, MUFG Head of Sustainability & Transition Finance Strategy for the Americas. Tobi and Ehsan discuss the recent report about AI’s influence in scaling ESG’s maturation. Overall, MUFG holds conviction in the merits of the evolution of AI to solve an array of ESG trade-offs. On aggregate, this has the potential to transform the way we approach sustainability to foster a more equitable and just society.

Assessing the fallout for the FX market for the busy week of G10 central bank updates

Lee Hardman, Senior Currency Analyst, and Abdul-Ahad Lockhart, Currency Analyst in London, discuss the main takeaways from this week’s G10 central bank policy meetings.
 
Has the case for a stronger USD been reinforced?  

100 dollar oil?

Global oil prices are teetering close to 100 dollars per barrel which risks fanning the flames of global inflation, strengthening the case for higher for longer rates and adding backbone to the dollar.
Conversations in the energy market are increasingly fixated on when, rather than if, oil prices will breach the 100-level threshold. In this week’s podcast, Ehsan Khoman, Head of Commodities, ESG and Emerging Markets Research (EMEA), contextualises the current state of affairs and offers his perspectives as to why most of the oil rally may be behind us and prices are unlikely to sustainably exceed 100 dollars per barrel.

September 2023 FOMC Preview and Market Implications

George Goncalves, MUFG Head of U.S. Macro Strategy, returns to review the price action since the summer break and what to expect from the FOMC at the upcoming meeting. George views the current environment as the most challenging for bond bulls, as the longer the Fed stays on hold with all this additional Treasury supply hitting the market, the pull toward higher rates will remain a powerful force. Granted, George does not believe that the window that will be afforded to the Fed staying “higher for longer” will be one that is long enough to fully normalize the yield curve towards the current level of Fed funds (because we expect the policy lags to hit the economy hard in Q4 into 1Q24). That said, the Fed can still use forward guidance signals, such as keeping their rate forecast “dot-plot” higher as a counter-balance to a bond market that is always looking for the next reason to rally. In terms of the FOMC meeting, we expect a slightly hawkish outcome, where the dots will try to pave the way for the Fed to signal they want rates to stay higher. Lastly we expect no change in actual Fed rate policy, a hawkish skip (i.e. no hike at this meeting) is our base-case.

No stopping the USD rally after a temporary setback

Lee Hardman, Senior Currency Analyst, and Andrea Hayward, Vice President of the Japanese Client Sales Group for EMEA in London, discuss what has been behind a volatile week for the USD.
They also discuss how the latest central bank updates from the BoE, BoJ and Fed in the week ahead are likely to impact the FX market.