The MUFG Global Markets Podcast

JPY weakness prompt Japanese policymakers to step up concern: The Global Markets FX Week Ahead Podcast

This week, Lee Hardman, Currency Analyst, and Reza Nasehi, Vice President of the Japanese Client Sales Group for EMEA in London, discuss the volatile price action in the FX market which prompted Japanese policymakers to step up concern over JPY weakness.
Reza and Lee also discuss implications for the FX market from the ECB’s latest policy update and the new UK Prime Minister Liz Truss’s energy relief package.
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G7 energy price caps risk exacerbating the cost-of-living crisis: The MUFG Global Markets Podcast

G7 leaders have been cogitating a cap on the price of Russian oil as a mechanism of driving down Russia’s energy revenues without causing a surge in global oil markets. Ehsan Khoman, Head of Emerging Markets Research (EMEA), believes that theoretically, such a price cap – if fully and successfully realised – would permit Russian oil flows while concurrently achieving Europe’s strategy of limiting Russian energy receipts.
Practically, however, he suggests that there are no guarantees that Russia would agree to ship its oil at capped prices – particularly if the cap is close to production costs.
Such retaliatory action runs the risk of elevating global energy prices, fanning the flames of global inflation and worsening the already acute cost-of-living crisis.
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September JPY cross asset outlook and BoJ, fiscal trading triggers for JGBs and JPY basis: The MUFG Global Markets Podcast

USDJPY is through 140. In contrast, JPY rates have risen gradually, JPY cross-currency basis is mixed – tighter in the front end on foreign demand for short-term, while wider in the belly through the long end of the curve – and the Nikkei Average is flat. It would not be unexpected for Japanese exporters to cover USDJPY ahead of the quarter-end, pushing USDJPY even higher.
In today’s episode, MUFG Chief Japan Strategist Takahiro Sekido reviews what was an eventful end of the summer, shares his outlook for September, and discusses the BoJ’s JGB buying plans and the Ministry of Finance’s JGB yield assumptions in its FY23 budget proposal. He also shares his views on spot Dollar/Yen, Yen rate, and Yen basis.
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September brings back-to-school trading environment: The MUFG Global Markets Podcast

In today’s episode, MUFG Head of U.S. Macro Strategy George Goncalves recaps the key events of the last couple weeks of trading into and out of the Labor Day holiday in the U.S. He discusses the renewed hawkishness by central banks, which were taken up a notch at Jackson Hole. Meanwhile, Fed speakers kept the hawkish tone alive post-event, which has helped keep the direction of rates higher since. George highlights that a big driver of the U.S. rates move, especially out the curve, was the global rise in rates, where European and U.K. rates have actually risen more than what we have witnessed in Treasuries. Looking ahead, George will be watching if Fed speakers keep delivering a consistent message, and how hawkish or not the ECB will be at its upcoming policy meeting this week. George concludes that the Fed will likely do 75, so long as market pricing is at least 50/50 chance of a 75 hike at the September meeting.
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USD hits new high as UK faces market moving week: The Global Markets FX Week Ahead Podcast

The US dollar has softened into the end of the week after hitting another new closing high on Thursday. This week, Derek Halpenny, Head of Research Global Markets EMEA & International Securities,  and Simon Mayes,  Head of UK and Ireland Corporate Sales, discuss the outlook for the US dollar while looking ahead to the key events next week – the ECB meeting and result of the Conservative leadership election in the UK.
Derek also provides an update to the MUFG FX forecasts and explains why USD/JPY could move further higher still after breaking the key 140-level.
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Europe’s gas crisis gets electrified: The MUFG Global Markets Podcast

With the critical Russian Nord Stream 1 pipeline being shut down again for at least three days from 31 August, fears of gas shortages have once again spiked in Europe. Encouragingly, most countries are managing to bring up their gas storage fillings close to targets ahead of winter. However, Europe is now having to deal with electricity shortages as well. On 9 September, EU energy ministers will gather for an emergency meeting to work out ways to decouple gas and electricity prices to ease at least one part of the cost-of-living crisis.
Ehsan Khoman, Head of Emerging Markets Research (EMEA), contextualises the current state of affairs, honing in on what options are available to EU policymakers when they meet on 9 September and what they could mean for global markets.
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Jackson Hole provides green light for further USD strength: The Global Markets FX Week Ahead Podcast

Lee Hardman, Currency Analyst, and Seiko Kataoka-Fisher, Vice President, Japanese Customer Sales for EMEA in London, discuss the main take away from Fed Chair Powell’s keynote speech at Jackson and the impact on the outlook for the USD.
Seiko and Lee will also discuss why higher rates in Europe are failing to support the EUR and GBP.
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Why European gas prices may be lower in winter than now: The MUFG Global Markets Podcast

We are firmly in the midst of a global energy crisis. The challenge is most acute in Europe – as the epicentre of global volatility – with benchmark natural gas (TTF) prices continuing to smash new records. Conventional wisdom signals that natural gas prices should be higher in the winter than in the summer, as that’s when demand is highest. However, Ehsan Khoman, Head of Emerging Markets Research (EMEA), believes the current extreme tightness in European gas balances flips that around. Without a recovery in Russian gas flows to Europe, the region’s blackout and heating risks in winter are potentially so extreme that we expect markets (and policymakers) to frontload action to now, i.e. in the summer, to manage the challenges.
This week, Ehsan delves into why storage building to get European targets of 90% full capacity by the end of October will mean less work for prices in the colder winter. Listen now:
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Outlook for inflation causing optimism to stall: The Global Markets FX Week Ahead Podcast

The optimism over declining inflation looks to be ebbing away fast. This week, Derek Halpenny, Head of Research Global Markets EMEA & International Securities, talks to Martin Viohl, Director of the Global Customer Market Group in London, about what factors were behind this deterioration in optimism over the outlook for inflation and whether the US dollar can sustain the rebound seen this week going forward.
Derek also looks ahead to next week when the Jackson Hole Symposium will be the highlight of the week but some focus will also be on the ECB minutes and the OFGEM price cap announcement.

Why the US Inflation Reduction Act is a game changer for the energy transition: The MUFG Global Markets Podcast

In what is being heralded as the most significant US climate legislation in history, the House of Representatives approved the “Inflation Reduction Act of 2022” (IRA) on 12 August. The US IRA marks a pivotal milestone for the US’ energy system transformation, with the bill including a number of key clean energy provisions fuelling significant investments in (i) hydrogen; (ii) biofuels (inclusive of sustainable aviation fuels – SAF); and (iii) carbon capture.
In this week’s podcast, Ehsan Khoman, Head of Emerging Markets Research (EMEA), delves into the details into the newly minted law that contains USD 369 billion in funding and why it may prove transformational for tackling climate change.