The MUFG Global Markets Podcast

Will the employment report trounce expectations, yet again?: The MUFG Global Markets Podcast

Despite another weak ADP employment report, John Herrmann is expecting another better than expected gain in payrolls, not to mention a larger than expected fall in the unemployment rate. Delays to public school openings represent down-side risk to our models forecast. Employment isn't the only thing that John is optimistic about. He's expecting growth to rebound by a big 32% in Q3 and many of his forecasts still remain more constructive than the consensus, the Fed, and other official forecasts. That scenario coupled with the Fed's new policy approach and fresh fiscal stimulus after the election could prove to be a powerful potion for the real economy?!
In this episode, MUFG US Rates Strategist, John Herrmann, previews the August employment report, including his forecasts for non-farm payrolls and the unemployment rate. He also explores the implications of those forecasts on his investment thesis, the 2s-30s yield curve steepener.

What happens when you take the “Abe” out of Abenomics?: The MUFG Global Markets Podcast

USDJPY dropped following the announcement of Prime Minister Abe’s resignation last Friday. Although the decline in USDJPY was limited compared to the scale of Nikkei Average drop, since higher US yields catalyzed Japanese investor buying of foreign bonds, thus supporting USDJPY downside. Political risk will only increase through mid-September. Not only USDJPY and JPY rates, but also the Nikkei Average will be prone to these risks, and Japanese investment flows are likely to stay active.In this episode, Takahiro Sekido, Chief Japan Strategist of Global Markets Research, MUFG Bank Tokyo discusses the impact of Abe’s resignation on markets and cross-border flows as well as updates of his view on the Yen, Yen rates, and Dollar/Yen cross-currency basis.

The FOMC’s growth projections are far too pessimistic, will they shift at this week’s virtual symposium?: The MUFG Global Markets Podcast

The FOMC’s economic projection for 2020 was especially pessimistic at their June 9-10 meeting, leading some Staff to examine the suitability of super accommodative policies, such as negative interest rates or yield curve control. Since that meeting, the outcomes of U.S. economic data has been strong, easily beating the consensus estimate.
Our models currently forecast growth of +29.00% over the third quarter, with a carry on growth of +2.00% in the fourth quarter, or possibly stronger. If our forecast proves accurate, then real GDP growth is significantly outpacing either the consensus estimate or the FOMC’s core projection. At what point will Wall Street and the FOMC catch up to our model’s forecast for the economy? Perhaps at the Jackson Hole Symposium? And, in this dynamic environment, is it likely that Chair Powell proves not to be as uber-dovish as forward markets and many strategists suggest?
In this episode, MUFG Rates Strategist, John Herrmann, previews this week’s virtual Jackson Hole Symposium and discusses what our model is currently forecasting. He also gives listeners an update on his core strategic investment stance of a 2s-30s yield curve steepener.

Euro facing turnaround as bullish momentum slows: The Global Markets FX Week Ahead Podcast

The trend of dollar weakness and euro gains could be at an end, according to Derek Halpenny, Head of Research for Global Markets EMEA.
This week, Derek looks at the prospects for EUR correction as the markets begin to show concern about evidence of a worsening COVID-19 situation in Europe and also gives his outlook for potential dollar recovery. Are key U.S. events this week, the Republican National Convention and Jackson Hole gathering, going to move the markets?

Can the U.S. economy rebound +28.7% in Q3, yet still require a massive jolt of stimulus over the coming 18 months?: The MUFG Global Markets Podcast

We tee up the likely tone of the Federal Reserve’s virtual Jackson Hole conference next week, by reviewing our forecasts for the key cyclical, macro-economic indicators of the U.S. economy. Then, we review our long-held forecasts over the structural imbalances of the economy, arguing that the persistence of those imbalances require even more forceful policy stimulus from fiscal and monetary authorities. If the political pendulum swings on November 3rd to the Democratic Party, in the Presidency and the Senate, then we anticipate another +2.650 trillion fiscal stimulus by February 2021. U.S. stock markets might advance to never before seen levels next year upon the resilience of the economy, the massive stimulus, and a vaccine(s) at some point over the coming 18 months.
In this episode, MUFG Rates Strategist, John Herrmann, reviews forecasts over the coming 12 months and beyond and tells listeners what these structural imbalances might ultimately require. He also offers more insights on the upcoming U.S. election and gives listeners an update on his core strategic investment stance of a 2s-30s yield curve steepener.

Global currencies feeling the pressure: The Global Markets FX Week Ahead Podcast

The New Zealand Dollar is continuing to underperform following a dovish update from the RBNZ; with negative rates still on the cards for New Zealand next year, Lee Hardman, Currency Analyst, gives us his outlook.
Lee also takes a look at the Turkish Lira, which is seeing continued downward pressure, with USD/TRY trading close to record highs. Will Turkey’s central bank be decisive enough this week to help stabilise the Lira? Listen now for more. 

Navigating the twists and turns of employment, growth, and the U.S. election: The MUFG Global Markets Podcast

Payroll gains in July were solid at +1.763mm, higher than consensus estimate (+1.500 million) but close to our forecast of +1.650mm. Similarly, GDP was better than consensus expectations of -34.8% but close to our -32.5% forecast. Moreover, we expect another better than consensus GDP print in the 3rd quarter and for the year-end U3 unemployment rate to be near 8.39%. If that's the case, why are we so worried about the outlook for employment and growth going forward?
In this episode, MUFG Rates Strategist, John Herrmann, reviews July employment and Q2 GDP reports and tells listeners what these mean for the labor market and growth going forward. He also offers his take on the upcoming U.S. election and gives listeners an update on his core strategic investment stance of a 2s-30s yield curve steepener.

The 2020 US Election Heats Up: The MUFG Global Markets Podcast

Please note this podcast was recorded prior to Joe Biden announcing Kamala Harris as his VP.
The 2020 election is less than 90 days away, and voting will begin in some states as early as next month. With the continued impact of the coronavirus, former VP Biden has maintained a lead over President Trump, but as the general election campaigning heats up, a number of upcoming events could impact the dynamic.
In this episode, Hana Rudolph, of MUFG’s Washington DC Representative Office, examines current dynamics of the 2020 election outlook: how Biden’s VP pick, the upcoming party conventions, and presidential debates could impact the race, and what investors should pay attention to in the months ahead. 

A strong yen and tight swap spreads ahead of the Obon summer holidays: The MUFG Global Markets Podcast

USDJPY has recovered to the 106 level so far in August. However, DXY shows that US dollar weakening trends remain intact. Globally, equity prices are firm and market sentiment is unlikely to drive JPY strengthening, but USDJPY could still fall because of seasonal cash repatriation factors. Japanese investors’, as well as Japanese companies’, flows for JGBs and foreign govies tend to be weak ahead of the Obon summer holidays.
In this episode, Takahiro Sekido, Chief Japan Strategist of Global Markets Research, MUFG Bank Tokyo discusses cross border flows, tight JPY swap and basis swap spreads, and updates on his view of the Yen, JPY rates, and JPY cross-currency basis.

Trouble on the horizon for the UK economy? The Global Markets FX Week Ahead Podcast

Last week’s Bank of England policy meeting was positive for the pound, decreasing downside risks as confirmation was given that negative interest rates won’t be introduced for now. While the BoE continued to display a relatively optimistic outlook for the UK economy, Lee Hardman, Currency Analyst at MUFG considers whether this could be put at risk as the UK economy looks set to struggle in the coming months.
As announcements about job cuts linked to COVID-19 continue to grow, along with the heightened risk of a disruptive Brexit outcome, Lee expects further policy easing will be needed in the coming months to ensure stability. Elsewhere, strains are building in emerging markets but will they help to support the US dollar more broadly? Click below to listen now.

Examining BoJ asset purchases and supply of Dollar funds: The MUFG Global Markets Podcast

Major Japanese companies began announcing Q2 earnings results last week. Earnings of major companies reflect the uncertainties of the COVID-19 pandemic. Japanese companies need to secure USD funding with JPY basis swaps to maintain their global business portfolios amidst uncertain business conditions. Despite all this chaos global stock and credit markets remain calm as central banks in key economies continue to buy government bonds and credit assets and supply USD funds. Will this continue?
In this episode, Takahiro Sekido, Chief Japan Strategist of Global Markets Research, MUFG Bank Tokyo discusses the increase in fiscal receipts from MoF issuance in the context of BoJ asset purchase and USD fund-supply operation announcements. He also updates his view on the Yen, JPY rates and JPY cross-currency basis.
 

Uncertainty for USD and GBP: The Global Markets FX Week Ahead Podcast

Uncertainty looms for both USD and GBP as both countries reckon with unpredictable forces. Relentless selling saw the dollar have a terrible month in July, and now concerns that President Trump may call into question the legitimacy of votes in the U.S. election and risks of the Fed failing to pass another fiscal stimulus package are further undermining the currency.
 
Meanwhile the pound has seen surprising strength over the past month, but with a Bank of England meeting on Thursday, local lockdowns and COVID-19 second wave fears, can this trend continue? Lee Hardman, currency analyst, gives his forecast. 

"Highly accommodative monetary policy...for an extended period": The MUFG Global Markets Podcast

The FOMC concluded its June policy meeting on the eve of the advance reading of Q2 US GDP. Although the FOMC did not make any new policy announcements, Chair Powell sent a powerful message that members of the committee were prepared to provide "highly accommodative monetary policy and the use of our tools for an extended period." Still the question remains: what are those tools, when will they be deployed, and for how long?!
 
In this episode MUFG Rates Strategist, John Herrmann, lays out his growth forecast for the US economy ahead of the release of the advance reading of Q2 GDP. He also breaks down the July FOMC meeting, tells listeners what to expect from the Fed's review of its monetary policy framework, and previews potential future policy announcements.

Phase 4 Update: Negotiations Coming to a Head: The MUFG Global Markets Podcast

Congress is poised for whirlwind negotiations on the next round of fiscal stimulus over the coming weeks, after Republican Senators unveiled their priorities in the Heals Act on Monday. However, Republicans and Democrats remain far apart on key issues, including unemployment benefits and business liability protections, and the outcome remains highly uncertain.
 
In this episode, Jesse Wheeler, of MUFG's Washington DC Representative Office, will go over where negotiations currently stand, review key issues and obstacles, and explore the timeline and potential outcome of what is sure to be a contentious debate on Capitol Hill.
 
 
 

Post-COVID-19 Global Supply Chains, Japanese FDI, and Financial Markets: The MUFG Global Markets Podcast

USDJPY has been on a downward trend of late. Not only has USD been weakening, but there is also the seasonal factor of Japanese companies repatriating overseas profits. The lower bound for USDJPY was firm until Japan’s long holiday weekend, likely supported by JPY selling from Japanese investors as overseas investing is deeply entrenched. All that said, the COVID-19 pandemic may already be upending traditional Japanese corporate FDI and investor behavior.
 
In this episode, Takahiro Sekido, Chief Japan Strategist of Global Markets Research, MUFG Bank Tokyo discusses Japanese FDI flow and profitability as well as implications for JPY basis. He also tells listeners what to watch for and updates his view on the Yen, JPY rates, and JPY cross-currency basis.

Why is USD so weak and will it recover? The Global Markets FX Week Ahead Podcast

In the U.S., an uptick of COVID-19 cases, flatlining high frequency data, election risk premium and social unrest are putting pressure on USD, as its continued weakness continues to cause ripples in the global markets.
 
In this podcast, Derek Halpenny, Head of Research for Global Markets EMEA, looks at the outlook for the currency and gives his predictions for the important upcoming July FOMC meeting this week. 

Implications of the BoJ’s July policy meeting, quarterly economic outlook, rinban, and USD funds-supplying operations: The MUFG Global Markets Podcast

The Bank of Japan recently concluded its July policy meeting. It also released median figures for growth and inflation in the quarterly economic outlook report. Although somewhat a non-event, those forecasts as well as upcoming BoJ rinban and USD funds-supplying operations have clear implications for financial markets that investors need to understand. In this episode, Takahiro Sekido, Chief Japan Strategist of Global Markets Research, MUFG Bank Tokyo discusses the July BoJ Monetary Policy Board Meeting as well as upcoming triggers for the JGB market. He also updates his view on the Yen, JPY rates, and JPY cross-currency basis.

UK lags on world stage: The Global Markets FX Week Ahead Podcast

The strength of the UK's economy is looking particularly vulnerable in the context of the global stage. China is leading the charge with its economic recovery from COVID-19, fiscal stimulus has helped the U.S. bounce back much more strongly than expected, and the euro is performing better as EU recovery talks move closer to agreement.
 
Lee Hardman, currency analyst, considers whether there is any chance of improvement for the GBP, taking into consideration stalling Brexit negotiations. 

Is our 2020 Outlook in jeopardy?: The MUFG Global Markets Podcast

A robust economic recovery associated with the U.S. economy's spring reopening is on a “collision course” with community spread of COVID-19. This wasn't something we expected to happen until after the start of the “new” academic school year and in the days and weeks leading up to the November election. Interest rate and economic forecasts based on these assumptions are clearly at risk. What is an investor to do?
In this episode MUFG Rates Strategist, John Herrmann, evaluates recent developments against his core strategic investment stance of a 2s-30s yield curve steepener.
 
 
 
 

Cross border flows at the end of a quarter with plenty of USD but scarce investment opportunities:The MUFG Global Markets Podcast

Mixed signals, including an improvement in global economic indicators and what’s increasingly looking like a second wave of COVID-19 infections in the US, have kept USDJPY in a narrow range. That second wave has already caused uncertainty about the US economy and could drive US long-term rates down and weaken the USD. We would also expect it to push global capital flows in general and Japanese investors in particular to developed markets and high quality assets. In this episode, Takahiro Sekido, Chief Japan Strategist of Global Markets Research, MUFG Bank Tokyo discusses global investors’ flows in and out of Japan around the end of June, as well as updates of his view on the Yen, JPY rates and JPY cross-currency basis.

Now isn't the time for complacency: The Global Markets FX Week Ahead Podcast

The quieter summer months should not be a moment for complacency, says Derek Halpenny, Head of Research for Global Markets EMEA.
Investors should not to take their eyes off the ball as it just takes a nudge to trigger huge market implications. With attention also turning to the upcoming U.S. election, polls suggest it is currently Democratic nominee Joe Biden’s to lose. What impact could his policies have on pricing? Listen now.

How long might it take to get a "4 handle" on the unemployment rate? Perhaps not as long as you think! The MUFG Global Markets Podcast

With hospitals running out of capacity due to the community spread of COVID-19 in certain U.S. cities and states, risk of re-opening delays and/or temporary local lockdowns persist. A new academic school year may only complicate matters – for both families and the broader economy. Still, economic growth could outpace consensus expectations and the FOMC’s June projections in 2020 and beyond.
In this episode MUFG Rates Strategist, John Herrmann, with a little more data at his fingertips, re-examines his "Year 2020 Strategy Update," including his view on growth and employment. He also tells listeners what this all means for his core strategic investment stance of a 2s-30s yield curve steepener.

Multiple Crises Reshape US Election Outlook: The MUFG Global Markets Podcast

Americans are now less than four months away from choosing their next president and members of Congress. The outlook has changed significantly with the onset of COVID-19, a sudden and severe recession, and social unrest across much of the country. Who will American voters trust to lead them in 2021 and beyond?
In this episode, Jordan Heiber, Deputy Representative in MUFG’s Washington DC Office, looks at how these multiple crises are impacting the election outlook, the expected policy priorities of President Trump and former VP Biden, and what investors should pay attention to as we get closer to November.

The BoJ’s Yield Curve Control vs the MoF’s JGBs: The MUFG Global Markets Podcast

The second half of calendar year 2020 began with persistent concerns of spreading coronavirus infections across the world, not to mention a second wave in North America. That, in part, has caused a lack of upward momentum for both USDJPY and Japanese stocks. Moreover, with 10 year Treasury yields in the United States only 0.70% at best and a sell-off in the long-end of the JGB yield curve, the traditional scenario of the US-Japan yield gap driving USDJPY higher no longer holds water.
In this episode, Takahiro Sekido, Chief Japan Strategist of Global Markets Research, MUFG Bank Tokyo discusses tensions in the JGB bond market, JPY cross-currency flows, and BoJ’s monetary policy operations, as well as updates his views on the Yen, JPY rates, and JPY cross-currency basis.