The MUFG Global Markets Podcast

In this episode, Glenn Schultz, MUFG Head of Agency Mortgage Prepayment Modeling and Strategy, discusses home price appreciation and whether we are in a housing bubble. He also explains the framework for his analysis as well as the anatomy of a bubble. 
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The US dollar has continued to weaken following the Jackson Hole symposium and softer NFP report, but the key events in the week ahead Lee Hardman, currency analyst, thinks will have the most impact on the markets will come from outside the U.S.
Lee shares his thoughts on the upcoming European Central Bank policy meeting, which he believes will be important for EUR performance. Meanwhile, the surprise announcement from Prime Minister Suga in Japan to not seek re-election has opened the door for a new leader. But will a new leader alter the outlook for the yen?
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The Jackson Hole Symposium saw a dovish speech from Federal Reserve Chair Powell, which sets the markets up for a window of dollar depreciation for the week ahead. The main takeaway, however, is that tapering is likely to come later this year, potentially starting in November or December.
Derek Halpenny, Head of Research for Global Markets EMEA and International Securities, outlines why the markets are keeping a close eye on upcoming data, such as the U.S. jobs report coming this Friday, and also gives his view as to why the taper plan could bear a striking resemblance to that of the 10-month program in 2014.
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The Delta COVID variant continues to wreak havoc on FX markets, with Dallas Federal Reserve President Robert Kaplan indicating last week that it may impact the timing of tapering.
Derek Halpenny, Head of Research for Global Markets EMEA and International Securities, outlines how this has changed expectations for the Jackson Hole meeting later this week and his forecast for USD strength going into September.
Elsewhere, while the UK economy deals with the knock-on effects of the ‘pingdemic’ which caused large numbers to self-isolate, PMI figures are showing the Eurozone is faring well. But how long for? Listen to this week’s podcast for Derek’s analysis.
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Japan has vaccinated 59 million people, with 45 million fully vaccinated, as of August 17. Prime Minister Suga yesterday stated that half of Japan’s population will be vaccinated by the end of this month. The developments left USDJPY and the Nikkei Average little change, while JPY basis tightened at the margin and JPY rates rose slightly.   
In today’s episode, MUFG Chief Japan Strategist Takahiro Sekido examines recent changes to BoJ and NY Fed monetary operations as well as discusses insights into Japanese investor activity in foreign markets from Japanese Ministry of Finance Balance of Payment data and the U.S. Treasury TIC data releases. He also shares his views on the Dollar/Yen, Yen rates, and Yen basis. 
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George Goncalves, MUFG Head of U.S. Macro Strategy, discusses the false breakout in yields into the Treasury auctions last week, characterizing them as just another supply concession setup. Given that the rates market failed to continue its rise up in rates, George remains neutral until we hear from the Fed.
 
In terms of the Fed, George goes over what to potentially expect from two key events ahead. First off are the minutes from the July FOMC meeting, where everyone will be combing through to see if there are any specifics as related to taper updates. And then towards the end of August markets will hone in on any new monetary policy developments and updates at the annual Jackson Hole Symposium. With recent Fed speakers increasingly sounding hawkish (as if trying to talk up rates) these events will drive markets.
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The Delta variant is still rearing its head and keeping market participants on their toes. New Zealand has declared a national lockdown following the detection of one COVID-19 case - will this impact the Reserve Bank of New Zealand’s plan to move forward with rate hikes tomorrow? Derek Halpenny, Head of Research for Global Markets EMEA and International Securities, gives his view.
Meanwhile, the Federal Reserve has a number of important communication opportunities upcoming, including the Jackson Hole meeting next week. Derek gives his outlook on the potential messaging, timing of tapering, and USD impact.
NB: In Derek’s trade ideas, he said "long EUR versus GBP". This should be "short EUR versus GBP".
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In this episode, Glenn Schultz, MUFG Head of Agency Prepayment Modeling and Strategy, discusses the burnout manifesting in prepayment rates across the coupon stack. He also discusses high SATO borrowers, and what prepayment surprise we may see from this borrower base.
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George Goncalves, MUFG Head of U.S. Macro Strategy, walks us through what looks like a potential double-bottom in long-term rates and a turn higher from here, where markets will then focus on how the Fed delivers its taper plans.
 
However, we have seen many false dawns in the rise in rates, and historically, the end of summer has been met with seasonally strong supporting factors for long-term rates. George’s view is that if the seasonals get negated this time that could setup rates to move higher into the end of Q3. Overall, it’s a potential critical inflection point that we could be going through.
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As of August 5, more than 52 million people in Japan have received COVID-19 vaccinations, and of these, nearly 40 million people are now fully vaccinated. The Tokyo Olympics drew to a close on August 8, but the Tokyo Paralympics will be held from August 24 to September 5. The Bank of Japan does not plan to meet in August. Market speculation suggests that the Fed is starting to cut back on monetary easing. JPY flow of funds in the Tokyo markets will likely determine JPY rates and USDJPY basis.
 In today’s episode, MUFG Chief Japan Strategist Takahiro Sekido dissects the BoJ’s monetary operations in July, the MoF’s outlook for JGB issuances in August/September, and USDJPY basis JGB arbitrage trading among foreigners. He also shares his views on the Dollar/Yen, Yen rates, and Yen basis.
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Lee Hardman, currency analyst, gives his view on U.S. payroll reports from last week, which exceeded expectations with strong employment growth in July. It keeps the Fed on track to announce QE tapering plans later this year and will encourage renewed speculation over even earlier tightening putting a bid into the USD.
Meanwhile, the Bank of England’s latest policy meeting surprised investors with suggestions of policy tightening beginning sooner. This change indicates growing confidence in the economic recovery of the UK; a good news story for GBP. Are the tides turning in the FX markets?
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The Tokyo Olympics are already more than half over. Japan’s State of Emergency has been extended and expanded through August 31, which will cover the Tokyo Paralympics. USDJPY and JPY rates are down, JPY basis has tightened, and the Nikkei Average has dropped, but JPY cross assets have traded in a narrow range. Overseas investing has dominated both JPY bonds and JPY basis. Over the near-term, we expect U.S. policy and Japan’s corporate sector overseas investing flows to hold the key to JPY rates and JPY basis. 
In today’s episode, MUFG Chief Japan Strategist Takahiro Sekido reviews JPY rates, basis and USDJPY in July and previews the same for August. He also discusses cross border flows, the U.S. Fed’s policy response impact on JGBs, and shares his views on the Dollar/Yen, Yen rates, and Yen basis.
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It's been a week full of surprises in the market, says Lee Hardman, currency analyst at MUFG. Positive data and a strong outlook suggests the Eurozone economy will continue to expand, with the easing of COVID restrictions allowing the economy to bounce back.
Today's podcast sees Lee take a tour of the Eurozone as he looks at the impact on individual countries, some of which are not faring as well. Elsewhere in the market, the US dollar continues to trade on a softer footing triggered by Fed Chair Powell’s indication that tapering will start in November or December or potentially early 2022.
But will it bring the relief that many are hoping for? Listen to the podcast for more insights.
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George Goncalves, MUFG Head of U.S. Macro Strategy, gives us his latest thoughts on the bond market and what to expect from the upcoming July FOMC meeting, and what may lie ahead as we enter the remaining weeks of the summer.George believes that the Fed has an opportunity to deliver a positive message on current economic conditions while remaining balanced on the risks that still exist from COVID-19 to inflation concerns. The Fed could also push back on the direr read that is being projected by the bond market, with long-term rates low while curves too flat, by staying on track to eventually deliver taper news.
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The Tokyo Summer Olympics have begun. As of July 25, 44.58 million vaccine shots have been administered in Japan, with 29.38 million persons now fully vaccinated. The daily rate of vaccinations has been around 787,000 shots. USDJPY dipped to the lower 109-yen level the evening of July 19 before rising to the mid 110-yen level later in the week, and 10Yr JPY swap rates stayed flat, at around 0.02%-0.03%, as did 3Mo JPY basis, at -8bps to -9bps. The Nikkei Average was up at the start of the week, boosted by the Tokyo Olympics and upturn in U.S. stocks.
In today’s episode, MUFG Chief Japan Strategist Takahiro Sekido discusses Japanese and foreign investor cross-border flows in June, as well as relative value of JPY bonds in USD terms. He also shares his views on the Dollar/Yen, Yen rates, and Yen basis.
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This week, all eyes are on Wednesday’s Federal Open Market Committee (FOMC) meeting. Derek Halpenny, Head of Research Global Markets EMEA and International Securities, expects Fed Chair Powell to give an indication of being on track toward tapering, but what timeline can be expected?
As the COVID-19 Delta variant continues to throw curveballs, the markets are remaining cautiously confident. How long can this last? Listen to the podcast to hear Derek’s outlook.
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Given the recent price action in the bond markets over the last 2 weeks, it has almost felt like it’s been 2 months since we last heard from MUFG Head of U.S. Macro Strategy, George Goncalves.
George has been watching this market from the sidelines after having gone neutral duration in early July, choosing not to chase the rally but instead see how far it could go before reassessing his views. U.S. 10yr rates then went on to go beyond George’s bottom of his range (1.25%, the low he had penciled in for the 3rd quarter) and then snapped back in the last couple trading sessions. George views that as a healthy start in hopefully what will turn out to be a consolidation, the kind that will give the Fed a chance to taper.
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This week, Lee Hardman, currency analyst, looks ahead to Thursday’s European Central Bank (ECB) meeting. As the markets continue to be concerned with global growth outlook, the key points Lee expects to be on the agenda include an update to forward guidance and potential adjustments to the bond purchase programmes.
Meanwhile, G10 central banks, including the Bank of England, are striking a more hawkish tone; what is in store for GBP this week? Listen now for more. 
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As of July 11, 36 million people are partially vaccinated, and 21 million people are fully vaccinated against COVID-19 in Japan. But with new infections on the rise, Prime Minister Suga was forced to decide to ban spectators at the Summer Olympics. USDJPY and the Nikkei have started to rise early in the week as U.S. stocks turned upward, but the Japan side is impacted by LDP’s political risks, COVID-19 and the Tokyo Olympics.
In today’s episode, MUFG Chief Japan Strategist Takahiro Sekido discusses the BoJ’s efforts to address climate change through monetary operations and cross-border investment flows. He also shares his views on the Dollar/Yen, Yen rates, and Yen basis.
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The past week has seen an under performance of high-beta and emerging market currencies.
Lee Hardman, currency analyst at MUFG EMEA, breaks down the various ongoing factors triggering this economic growth scare, including increasing numbers globally of the Delta COVID variant.
Meanwhile, the European Central Bank has completed its policy review, with changes to its goals and targets creating more leeway to maintain looser policy for longer. How has this been received by the markets?
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As of July 5, 32.5 million people have received vaccinations in Japan, with 18.3 million people fully vaccinated. Progress with vaccinations as well as the strong U.S. jobs data for June have been positives, but the ruling party performed unexpectedly in the Tokyo Assembly elections and upside for USDJPY and the Nikkei Average has been limited.
In today’s episode, MUFG Chief Japan Strategist Takahiro Sekido discusses JPY cross-asset triggers in light of recent developments as well as Japan political risk following the Tokyo Assembly elections. He also shares his views on the Dollar/Yen, Yen rates, and Yen basis.
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In this episode, MUFG Head of U.S. Macro Strategy, George Goncalves, returns to recap, once again, what has felt like an unrelenting rally in long-term rates. He also previews what to look out for in the June FOMC minutes and more broadly what to expect from the Fed and economic data over the course of the third quarter.  
George's view is that the Fed is clearly ready to start working on a taper road map but the conditions in the economy and markets need to be just right. If data continues to remain solid with healthy job growth and stock markets avoid a major correction over the quarter, then at the September FOMC meeting the Fed could announce its tapering plans, starting with reducing mortgage bond purchases first.
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Derek Halpenny, Head of Research for Global Markets EMEA and International Securities, looks at what to expect from USD following bumper U.S. non-farm payrolls announced on Friday and fallout from the last FOMC meeting.
Meanwhile, with the Reserve Bank of Australia (RBA) meeting tomorrow to discuss rate hikes and an expected announcement from Prime Minister Johnson about the end of UK COVID-19 restrictions, what is in store for the global FX markets? Listen to Derek’s analysis here.
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H1 2021 is already drawing to a close. As of June 27, more than 25 million Japanese have been vaccinated against COVID-19. Campaigning for the Tokyo Assembly elections began June 25, and voting starts on July 4. These events will be watched as a possible harbinger of a Lower House election this fall. At this stage, the ruling coalition is expected to prevail, which would limit any political stresses. JPY cross-currency flows have been more active than USDJPY, JPY rates, and JPY basis price action.
In today’s episode, MUFG Chief Japan Strategist Takahiro Sekido discusses the latest in Japanese and foreign investor cross-border flow, BoJ’s inaugural JPY interest rate incentivized deposit amount breakdowns, and JPY cross-currency arbitrage opportunities. He also shares his views on the Dollar/Yen, Yen rates, and Yen basis.
 
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