The MUFG Global Markets Podcast

Markets go on EUR / USD ’Parity Watch’: The Global Markets FX Week Ahead Podcast

Another extraordinary week has seen some further record moves in rates markets and FX volatility as well. Derek Halpenny, Head of Research for Global Markets EMEA and International Securities, talks with Shan Husain, Vice President, FI FX Sales, about MUFG’s updated FX forecasts published in today’s Foreign Exchange Outlook. Derek explains why MUFG Research is now on “parity watch” as the US dollar continues to strengthen.
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Mid-year outlook for emerging markets and commodities: The MUFG Global Markets Podcast

2022 has witnessed a lot and we are only half way. It’s seen one of the worst financial market performances on record, an intense conflict in Europe, the re-emergence of the COVID crisis in China and the first 75bp hike by the Federal Reserve since 1994.
In this week’s podcast, Ehsan Khoman, Head of Emerging Markets Research (EMEA), contextualises how emerging markets and commodities markets are navigating the storm in global markets and offers prospects of what to expect in the second half of the year.
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From inflation risks to recession fears: The Global Markets FX Week Ahead Podcast

Increased global recession fears fueled some unprecedented moves in rates markets this week and Derek Halpenny, Head of Research Global Markets EMEA and International Securities,  talks to Michael Owen, Head of Global Client Desk EMEA,  about the implications of these moves for the FX markets going forward.
There are plenty of key events next week that could also fuel renewed FX volatility – the G7 summit in Germany, the ECB Forum in Sintra, Portugal, and natural gas prices in Europe all have the potential to influence market direction next week.
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Approaching Europe’s endgame in gas markets: The MUFG Global Markets Podcast

Over the last week, European natural gas prices have rallied more than 60% to around EUR135/MWh as Russia reduced flows via its main major Nord Stream 1 pipeline, citing issues with turbines undergoing maintenance in Canada with sanctions making it difficult to return it. The cuts which have resulted in reduced gas deliveries to Germany, the Netherlands and Italy comes at a time when Europe is in injection season and pressing hard to hit its target of having storage 80% full by 1 November (currently 55% filled), ahead of the heating season. On net, these cuts are pushing Europe’s gas crisis toward its endgame.
In this week’s podcast, Ehsan Khoman, Head of Emerging Markets Research (EMEA), contextualises the concerning state of affairs and believes that if these reduced flows persist through the summer, then Europe may find it a challenge to adequately supply itself with gas throughout winter, requiring persistent gas prices north of EUR200/MWh to balance the market.
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JPY sell-off resumes as BOJ is left standing alone: The Global Markets FX Week Ahead Podcast

Elevated inflation is prompting G10 central banks to speed up tightening plans, but there is one notable exception - the Bank of Japan. Why is the BOJ not following suit? 
Lee Hardman, Currency Analyst, and Matthieu Gloux, Head of MUFG’s Global Client Sales for EMEA in London, explain and also discuss implications for the FX market from recent central bank policy updates.
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Commodities supercycle is only in its first innings: The MUFG Global Markets Podcast

In a world devoid of inventory buffers, commodity markets are beginning to experience severe distortions in conventional behaviour. Global markets are having to deal with an extreme molecules crisis across the commodities complex with shortages across energy, metals and agriculture.
Ehsan Khoman, Head of Emerging Markets Research (EMEA), believes that demand destruction remains the only practical mechanism to rebalance exceptionally tight commodity markets in the near-term.
Critically, however, he advocates that once widespread, demand destruction is not a long-term solution with a risk of the permanent structural challenges facing oil and broader commodities – de-globalisation, de-carbonisation, the structural rise demand from low income groups and a reduction in capital availability given structural underinvestments over the years – resurfacing as soon as demand recovers once again.
Ehsan believes this is a decades-long commodities supercycle and we are only in its first innings.
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MUFG June FOMC Preview: Expect more hawkish signals as inflation risks linger: The MUFG Global Markets Podcast

In today’s episode, MUFG Head of U.S. Macro Strategy George Goncalves discusses his FOMC preview for the upcoming June meeting. George expects more hawkish signals from the Fed as they continue their fight against persistently high inflation. This will likely come about with the first 75bp hike since the 1994 hiking cycle, as well as a meaningful jump higher in the rates dot plot. The risk of the Fed introducing a balance-sheet unwind facility to make the QT caps whole is also lurking in the wings. On the dovish side, it would be odd if the Fed does not do 75bps, but that is a risk as is the risk they highlight recent market vol. 
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The Bank of Japan debates monetary policy as the Yen threatens to break 20 year lows: The MUFG Global Markets Podcast

The 10Yr JGB zone has been dented as USDJPY continues to climb and the JGB yield curve steepens. Market speculation about Bank of Japan yield control operations persists ahead of the central bank’s June meeting. USDJPY basis has widened in line with U.S. rates. The Nikkei Average is lurching along. 
In today’s episode, MUFG Chief Japan Strategist Takahiro Sekido reviews lifers’ FY21 earnings results and changes in their asset management portfolios, analyzes JPY cross asset developments in May, and previews the June BoJ meeting. He also shares his views on Dollar/Yen, Yen rate, and Yen basis.
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Japanese policymakers voice more concern over yen weakness: The Global Markets FX Week Ahead Podcast

Lee Hardman, Currency Analyst, and Simon Mayes, Director of MUFG’s Global Customer Marketing Group for EMEA in London, discuss the main fundamental drivers of the yen’s recent sharp sell-off, and potential triggers for a reversal of the bearish trend.
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Implications of a strong US dollar for emerging markets: The MUFG Global Markets Podcast

Whilst investors have focused on the negative reverberation of rising US rates on EMs, a strong USD heralds additional pressures for the EM complex.
In this week’s podcast, Ehsan Khoman, Head of Emerging Markets Research (EMEA), examines three core transmission channels in which a strong dollar – a constituent or consequence of tight US monetary conditions – is impacting emerging markets.
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