The MUFG Global Markets Podcast

Spring/summer turnover outlook and the outlook for the agency mortgage basis: The MUFG Global Markets Podcast

In today’s episode, MUFG Head of Prepayment Modeling and Strategy, Glenn Schultz, provides our estimate for turnover across the 2023 spring/summer home selling season and the implication of our turnover outlook on relative value across the coupon stack. He also discusses the near, intermediate term outlook for the agency mortgage basis against the backdrop of the SVB and Signature Bank failures, along with FDIC liquidation of the securities portfolio.
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Revising our forecasts – lower for oil; higher for gold: The MUFG Global Markets Podcast

Over recent weeks, global markets have seen the largest bank collapse since 2008, the largest 2-year US Treasury yield drop since 1987 and two of the largest European banks pushed into a merger to ensure broader systemic stability. Such scarring has different reverberations across the commodities complex.
Ehsan Khoman, Head of Commodities, ESG and Emerging Markets Research (EMEA), discusses why he is lowering his oil price forecasts which is more mark-to-market premised on a delivered market environment, and raising his gold price projections as elevated recessionary angst bring an asymmetry to the fore that skews the precious metal returns to the upside in an unparalleled manner.
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Cross-border securities flows hit record levels ahead of BOJ Leadership Change – The MUFG Global Markets Podcast

JGBs have sold-off while changes to USDJPY and JPY basis have been relatively limited. The Bank of Japan’s March Tankan survey showed business sentiment worsened only slightly, as the jitters over the US and European banking sectors have not yet spread to Tokyo. However, the Nikkei Average is up only slightly as foreign investors unload Japan shares simply because they are a risk asset. Cross boarder bond flows have been massive in the Tokyo market.
In today’s episode, MUFG Chief Japan Strategist Takahiro Sekido review JPY assets and securities flows in March and also looks ahead to triggers for April. He also shares his views on spot USDJPY, Yen rates, and Yen basis.
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Can JPY weakness be sustained while USD weakens further? The Global Markets FX Week Ahead Podcast

We end the week for the first time since early March without any elevated investor concerns over the health of banks. The calming of investor concerns has seen US yields rebound but the FX response has been mixed.
Derek Halpenny, Head of Research, Global Markets EMEA and International Securities, discusses the FX impact of easing banking sector concerns with Simon Mayes, Head of UK, Ireland and Swiss Corporate Sales. Derek also looks ahead to next week and the potential rates and FX implications of the US jobs report at the end of the week.
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Japanese markets and investors have weathered banking’s crisis of confidence well so far – The MUFG Global Markets Podcast

Dollar / Yen is well supported and judging from the speed of the reversal of yen rate declines and yen basis widening, the spread of risk from US and European financial unease to the Tokyo market has been limited. The market may have avoided major turmoil at the end of the fiscal year, but cross-asset flows and markets still need to be monitored for signs of stress.
In today’s episode, MUFG Chief Japan Strategist Takahiro Sekido evaluates the current state of the market after the outbreak of financial unease in Europe and the United States, and discusses US TIC and JSDA securities investment flow data. He also shares his views on spot USDJPY, Yen rates, and Yen basis.
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Banking fears trigger sharp reassessment of Fed policy outlook: The Global Markets FX Week Ahead Podcast

Lee Hardman, Senior Currency Analyst, and Michael Owen, Head of Global Client Desk EMEA, discuss the loss of confidence in the banking system and how it is impacting central bank policy. Will the USD continue to weaken in response to banking fears?
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Japanese markets react to a crisis of confidence in banks overseas as central banks outside of Japan continue to battle inflation: The MUFG Global Markets Podcast

Japan’s markets have reacted to the banking issues in the U.S. and Europe in classic financial crisis/risk aversion fashion, with JPY rallying, JPY rates falling, and JPY basis widening. Japanese investors are passively watching the credit jitters in the U.S. and European banking sector, but they are being impacted considerably, given their sizeable stock overseas assets suggesting they will be monitoring global financial markets closely.
In today’s episode, MUFG Chief Japan Strategist Takahiro Sekido shares his views regarding the credit concerns in the U.S. and European financial sector and his outlook for JPY cross assets and discusses the collaboration among six central banks for boost USD liquidity funding. He also shares his views on spot Dollar/Yen, Yen rate, and Yen basis.
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FOMC’s New Balance of Risks: Inflation vs. Banking Issues: The MUFG Global Markets Podcast

George Goncalves, MUFG Head of U.S. Macro Strategy, returns to discuss the new risks facing financial markets and how the Fed will handle the current inflation backdrop, while dealing with renewed bank issues. George reviews two of his recent reports, one focused on the financial system’s plumbing and liquidity dynamics and the other on his March FOMC preview. Listeners will recall that our house view has been that the Fed can raise rates as high as they like, but the criteria to stop matters more than where they settle at, while at the same time the more they hike, the likelihood that they break something in the markets or the economy or both where high.
We argue that the criteria to stop hiking is surfacing and that the hiking cycle may be close to being over. The tightening of financial conditions and credit standards post the recent bank failures, along with the long and variable lags of the prior hikes in the system (which are clearly leaving a dent on the financial markets) will likely result in the upcoming recession being ushered in sooner. This makes the upcoming FOMC meeting decision a much closer call as a result.
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Elevated risks ahead of FOMC and BoE meetings: The Global Markets FX Week Ahead Podcast

Risk sentiment has continued to deteriorate. Derek Halpenny, Head of Research, Global Markets EMEA and International Securities, discusses with Shan Husain, Vice President FI FX Sales, the concerning deterioration in investor sentiment into the end of the week despite numerous steps taken by the authorities in the US and Europe to restore confidence in the banking sector.
Derek also looks ahead to the implications of this uncertainty for the FOMC and BoE policy meetings next week and speaks about currencies that are set to perform best if current market conditions persist or deteriorate further.
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National oil companies journey to net-zero – Performing and transforming: The MUFG Global Markets Podcast

Much of the airtime in the energy industry to lower emissions has been centred on international oil companies (IOCs). Yet, national oil companies (NOCs) account for the largest proportion of absolute upstream emissions. Successful energy transition will depend in large part on NOCs, who possess unparalleled access to competitive natural resources and capital, compared to the more constrained IOCs.
Ehsan Khoman, Head of Commodities, ESG and Emerging Markets Research (EMEA), discusses MUFG’s latest ESG report, entitled, “National oil companies journey to net zero – performing and transforming”, that was published earlier this week (see here for the full report).
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