The MUFG Global Markets Podcast

Last week’s dots tantrum from the Federal Reserve, as well as the shock guidance in the dot profile to two rate hikes in 2023 and seven Fed Reserve members looking for a hike in 2022 is still on everyone’s mind. This was a big shock to markets as the last guidance cited there would be no rate hikes until 2024.
With 12 Fed speaking engagements in the week ahead, and the BoE meeting on Thursday, this is an important week that could either reassure the markets or cause further consternation, according to Derek Halpenny, Head of Research Global Markets EMEA and International Securities.
Listen to today’s podcast to hear his thoughts and predictions for the week ahead.
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The State of Emergency covering some parts of Japan will likely be eased at the end of June. Not only USDJPY, but also JGBs and JPY basis will likely stay in their narrow trading ranges, covered with foreign investors’ JPY investing flows, ahead of Japanese key political events like the July Tokyo Assembly election on July 4th and the Lower House dissolution and general elections this fall.  
 In today’s episode, MUFG Chief Japan Strategist Takahiro Sekido discusses Japanese pension fund flows as well as Asian investor U.S. bond flows based on U.S. TIC data, while offering a preview of the June BoJ meeting. He also shares his views for Dollar/Yen, Yen rates, and Yen basis.

In this episode, MUFG Head of U.S. Macro Strategy, George Goncalves, returns to discuss some of the drivers that have led to a decent rates rally, even in the midst of record high inflation prints. We also review George’s recent report and provide a recap of what to expect at the June 2021 FOMC meeting.  
George views this Fed meeting as being a close call on three key items: 1) the potential evolution of the 2023 interest rate forecasts (otherwise known as the dots), 2) will they or won’t they raise the administered rates of the RRP and IOER at this meeting, and 3) will we get any specific guidance of taper plans.
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The main focus for the FX markets this week is the upcoming FOMC meeting, which has the potential to trigger volatility in the week ahead, according to Lee Hardman, currency analyst at MUFG.
This could serve as a potential trigger to upset the market if the Fed turns more hawkish. With the release of inflation data for the U.S. last week showing inflation rising to 5% and core inflation rising to its highest level since the 1990s, there will be a close eye on whether the Fed changes their inflation language.
Elsewhere, with higher yields on offer in emerging markets, Lee offers his thoughts on the best currencies to look out for in the days ahead.
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In this episode, Glenn Schultz, MUFG Head of Agency Mortgage Prepayment Modeling and Strategy, discusses how we are in the late stages of the refinance wave and shares his views on where home price appreciation and housing supply is going over the next year.
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The state of emergency covering 10 prefectures across Japan will not be lifted early. However, the Nikkei stock and JGB markets have not reacted noticeably. Deliberations among Japanese politicians will soon come to a head as the end of the current ordinary Diet session draws near, and preparations for the Tokyo Assembly election in early July have gotten underway. This is a good time for investors to chew over the FY20 earnings results of Japan’s financial sector, and think ahead to what is to come for JPY cross-asset market pricing.
In today’s episode, MUFG Chief Japan Strategist Takahiro Sekido discusses Japanese life insurance companies’ investing flows and the impact on markets based on analysis of their FY20 earnings. He also shares his views for the front-end of the JGB curve as well as Dollar/Yen, Yen rate, and Yen basis more generally.
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A disappointing job payroll report from the U.S. released on Friday meant a reactionary drop in 10-year Treasury yields. What impact could this potentially have on the FX markets this week ahead of US CPI data, the ECB meeting and key UK data?
Derek Halpenny, Head of Research Global Markets EMEA and International Securities, gives his thoughts.
Derek also gives his outlook for the upcoming European Central Bank meeting – is a slowdown in Pandemic Emergency Purchase Program (PEPP) purchases on the cards?
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The end of the April-June quarter is drawing near. Ten prefectures in Japan have been under a state of emergency and will be until June 20. USDJPY has risen, JPY basis has shrunk, and the long end of the JPY swap rates curve has come under downward pressure recently, while the front end has risen slightly. Japanese leading economic indicators have been improving, and the trade surplus grew in April as exports rose. Inflation, while still weak, is up slightly. Amidst the ongoing pandemic, fragility lurks in the real economy’s improvement as well as in price and financial transmission mechanisms.
In today’s episode, MUFG Chief Japan Strategist Takahiro Sekido discusses May JPY cross asset reviews as well as June JPY arbitrage trading triggers. He also shares his views for Dollar/Yen, Yen rate, and Yen basis.
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This week, the FX market has seen the pound rise to fresh new highs against the dollar. Lee Hardman, currency analyst, shares the reasons behind this and his thoughts on the recent surge in inflation which is sparking concerns that interest rates could go up as the UK economy bounces back.
Meanwhile, the People’s Bank of China has raised the required reserve ratio up by two percentage points for the first time in more than ten years - how this is impacting global currencies? Listen now for Lee’s analysis.
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In this episode, we are pleased to introduce MUFG Head of U.S. Macro Strategy, George Goncalves. George briefly takes us through his strategy approach of the four pillars of a macro analysis, a process that he has fine-tuned and enhanced over his 20 years of being in the financial markets.  
We discuss his outlook for the U.S. economy and what that means for rates and the Fed. In short, George’s view is that aggregate demand was pulled forward and thus the U.S. will see economic activity decelerate versus current trends and future expectations, but the Fed will still need to taper QE nonetheless.
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After a long period of excessive risk taking across global markets, recently issued financial stability reports indicate central banks are nervous. This week, Derek Halpenny, Head of Research Global Markets EMEA and International Securities, shares his top thoughts about how this shift could impact policy and monetary stance.
Derek also touches on Bitcoin and its role within financial markets, outlook for the Russian ruble and performance of the Euro Stoxx 50 Index.
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In this episode, Glenn Schultz, MUFG Head of Agency Mortgage Prepayment Modeling and Strategy, talks about the reprieve we will see in prepayment speeds but indicates this is certainly not the end of the refinance wave. He also discusses his view on May prepayment speeds.
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Japan’s state of emergency has been expanded since last week to cover nine prefectures, including Hokkaido, Hiroshima, and Okayama. Japan’s government is setting up large-scale vaccination facilities and bearing down on its vaccination program. Dollar/Yen, Yen rate, and the Nikkei have only shown a limited reaction, but the global post-COVID-19 recovery trend appears to be spreading. This suggests limited downside for USDJPY, Yen rate, and the Nikkei.
In today’s episode, MUFG Chief Japan Strategist Takahiro Sekido dissects securities investing flows over Golden Week and discusses the March Balance of Payment and April International Transactions in Securities data. He also shares his views for Dollar/Yen, Yen basis, and Yen rate.
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Investors are growing concerned about the continued threat of inflation. Is this build in inflationary pressures transitory, or here to stay?
Lee Hardman, currency analyst, looks at the Fed’s view and gives his outlook as the dollar fails to build on gains from a stronger than expected U.S. CPI report last week.
Lee also looks at the outlook for the pound as apprehension about the new Indian COVID variant hampers reopening optimism in the UK.
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Prime Minister Yoshihide Suga extended the state of emergency covering some parts of Japan late last week. Fukuoka and Aichi have been added to Tokyo, Kyoto, Osaka, and Hyogo as regions affected, while Miyagi Prefecture is no longer under coverage. While Dollar/Yen, Yen rate, and Yen basis have reacted to weak U.S. jobs numbers that fell short of expectations and plunging U.S. high-tech stock prices, the reaction to that as well as the extension of the state of emergency has been muted in the face of Yen selling flows.
In today’s episode, MUFG Chief Japan Strategist Takahiro Sekido dissects Japan’s April monetary base and fiscal balance, as well as discusses May fiscal fund flows. He also shows his views for Dollar/Yen, Yen rate, and Yen basis.
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Is the US dollar still tied to the 10-year Treasury yield? Despite plunging on Friday, the 10-year yield is slightly higher this week.
Derek Halpenny, Head of Research Global Markets EMEA and International Securities, offers context and outlook for USD amid weaker than expected US Non-Farm payroll figures.
Derek also reflects on the Bank of England monetary policy report and provides his views for G10 currencies following UK elections last week.
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Japan remained under a state of emergency in some designated areas during the Golden Week holidays. Dollar/Yen and JPY rates have traded in narrow ranges, edging up slightly, and the Nikkei Average also lacks momentum. JPY basis has tightened considerably. Arbitrage trading among foreign investors was active as Japanese investors were on holiday. Cross-border factors are more likely to impact JPY asset volatility than domestic factors as monetary easing continues around the world.
In today’s episode, MUFG Chief Japan Strategist Takahiro Sekido reviews the Bank of Japan’s April policy meeting, discusses adjustments to the coordinated global central bank effort to supply U.S. Dollar funds, and takes listeners through relative value in cross-border security investments. He also shares his views for Dollar/Yen, Yen rate, and Yen basis.
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As positive COVID-19 data points to the effectiveness of the vaccine roll-out, confidence in the bounce back of the UK economy is growing. Will this mean an upgrade to GDP forecasts at the Bank of England policy update this week?
Lee Hardman, currency analyst at MUFG, outlines what to expect from the update, including outlook for the pound and Quantitative Easing (QE) purchases. Lee also touches on the upcoming Scottish Parliament elections – could another independence referendum be on the cards?
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Japanese lifers released their investment strategy plans for FY21 last week. In 2H FY20, amidst the COVID-19 pandemic, U.S. and Japanese rates reversed course and rose as stock market volatility picked up around the world. USD started to weaken and hedging costs remained low and stable after USDJPY basis tightened, as Japanese investors showed a greater focus on yield and bought more U.S. Government agency and corporate bonds with their Treasury redemptions. Japanese investors’ investing flows will be a critical catalyst for global yields and JPY basis. 
In today’s episode, MUFG Chief Japan Strategist Takahiro Sekido discusses key points with Japanese lifers’ 1H FY21 investment strategies including the impact on individual USD, EUR, and JPY asset classes as well as discusses dynamics in the JPY Samurai bond market and key points for the near term. He also outlines his views for Dollar/Yen, Yen rate, and Yen basis.
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The upcoming Federal Open Market Committee (FOMC) meeting is what investors are eyeing this week, according to Derek Halpenny, Head of Research for Global Markets EMEA and International Securities.
Derek outlines what to expect, taking into account recent comments made by Fed Chair Powell which indicate a shift in communication strategy, with a move towards emphasising guidance on rates, as opposed to tapering.
He also touches on how global COVID-19 infection rates and U.S. corporate earnings will impact the markets.
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Japanese Prime Minister Yoshihide Suga visited the U.S. this past weekend. It was his first face-to-face meeting with U.S. President Biden in Washington D.C. Then, U.S. and Chinese officials issued a joint statement after talks on climate change in Shanghai, China. On April 16, the U.S. Treasury released its semi-annual report on currencies, avoiding naming countries, including China, as currency manipulators. So far in April, Dollar/Yen and Yen rates have dipped slightly, while narrowing pressure on Yen basis has picked up.
In today’s episode, MUFG Chief Japan Strategist Takahiro Sekido discusses the outlook for Japanese corporate foreign direct investment, February U.S. TIC data, and cross-border securities investing flows in the Tokyo markets so far in April. He also shares his views for Dollar/Yen, Yen rate, and Yen basis.
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As the vaccine roll-out gathers momentum, key data from China, the U.S. and UK indicate signs of economic growth. This week, Lee Hardman, currency analyst, looks at what this global economic recovery could mean for the markets, which are looking increasingly upbeat, and gives his views on the recent weakening of the dollar.
Lee also outlines what to look out for at the upcoming Bank of Canada meeting on Wednesday.
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FOMC Participants’ expectations for the year 2021 have moved up a lot in terms of GDP and employment growth and in total and core consumer inflation. Still, in his recent comments, Chair Powell relates risk that those expectations may be ratcheted up even higher at the June 15-16 2021 Meeting. MUFG U.S. Rates Strategist John Herrmann, argues that the Committee participants need to “catch up” not only to the strong economic rebound over the month of March, but also to the persistence of strength in the economy over the balance of the summer and of the year.
In today’s podcast, John reviews the CPI report and previews the retail sales report. His models forecast a remarkable surge in retail spending over the coming months of March, April, May and into June. In turn, John’s GDP growth rate forecast remains the highest of all professional forecasters in the Bloomberg survey, at +9.03% yoy in 2021, and his growth forecast remains near 260 bps stronger than the FOMC’s projection.  
 
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In this episode, Glenn Schultz, MUFG Head of Agency Mortgage Prepayment Modeling and Strategy, discusses whether or not the March remit data is a sign of the end of the refinance wave. He also discusses the implications of the CFPB’s extension on borrower forbearance and how this will impact home prices.
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