The MUFG Global Markets Podcast

Contextualising how US gas can help Europe: The MUFG Global Markets Podcast

The US administration is finalising plans with the European Union to support the continent's access to incremental US liquefied natural gas (LNG) supply in an effort aimed at slashing Europe’s dependence on Russian energy.
Whilst the full details have yet to be announced, Ehsan Khoman, Head of Emerging Markets Research (EMEA), discusses why the near-term considerations are likely to focus on a reallocation of supply to Europe, rather than volumetric increases in total US LNG exports given that US terminals are already running at capacity.
Listen in to this week’s podcast as he discusses why for Europe, this increased US LNG intake would raise summer supply at the margin which will help to take European storage to comfortable levels ahead of next winter, unless Russian inflows fall further with renewed risks surrounding the proposed shift to Russian Roubles (RUB) payments that may lead to a fall in EU termed gas purchases.
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A defining moment for the U.S. bond market: The MUFG Global Markets Podcast

In today’s episode, MUFG Head of U.S. Macro Strategy George Goncalves summarizes the current rates and curve dynamics post the first Fed hike of this cycle. George is pretty emphatic that the U.S. bond market needs to hold the line—which is short for saying that we are in the intersection of some key technical metrics and market structure factors—and that this perhaps is the most important time in the bond market’s history to date.
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TicBop, the BoJ & USDJPY: The MUFG Global Markets Podcast

Last week, Prime Minister Kishida decided to lift all remaining quasi-emergency measures introduced to slow the spread of COVID-19. The Bank of Japan is focusing on normalizing monetary policy ahead of the post-pandemic era as inflationary pressures build around the world. The Nikkei Average and USDJPY reflect the shift in events in Ukraine, and JPY basis reflects the sense of crisis.In today's episode, MUFG Chief Japan Strategist Takahiro Sekido deliberates the attributes of U.S. bond flows among Japanese and Asian investors more broadly, as well as the BoJ's March meeting and policy outlook. He also shares his views on the Dollar/Yen, Yen rate, and Yen basis.
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Central banks set policy amid geopolitical instability: The Global Markets FX Week Ahead Podcast

While the focus is very much still on the potential fallout from the Russian invasion of Ukraine, this week did also include three key central bank meetings – the Federal Reserve, the Bank of England and the Bank of Japan.
Derek Halpenny, Head of Research for Global Markets EMEA and International Securities, discusses the differing messages from each of these market-moving meetings with Michael Owen, Head of Global Client Desk EMEA.
What are the FX implications going forward in the context of the continued optimism over the prospects of peace talks reaching a positive outcome? Listen now for Derek’s outlook.
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Commodities are the hedge of first resort during Fed hiking cycles: The MUFG Global Markets Podcast

With the US Federal Reserve (Fed) kick-starting its hiking cycle, investors are seeking protection. While financial assets (equities, bonds and credit instruments) are forward-looking and driven by growth “rates”, commodities are spot physical assets driven by demand “levels”.
This distinction matters as the Fed hikes slows down the growth rate of demand (which drives anticipatory financial assets), not demand levels (which drives unanticipatory assets like commodities) – so long as the level of demand exceeds the level of supply, which is corroborated with nearly all major commodities in super backwardation (signalling market tightness).
In this week’s podcast, Ehsan Khoman, Head of Emerging Markets Research (EMEA), discusses why commodities remain the best hedge during periods of the Fed hiking cycle. His examination of each of the nine Fed hiking cycles since 1972 signals that global commodities have on average outperformed all major cross-asset classes.
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March FOMC Preview: Lift-off in a period of uncertainty: Thee MUFG Global Markets Podcast

In today’s episode, MUFG Head of U.S. Macro Strategy George Goncalves discusses the intra-meeting price action between the last FOMC through today and spells out what to watch for in the Fed’s updates for the economic outlook and rate path ahead (i.e. the dot plot). George expects the Fed to try to thread the needle as a lot of hikes are already priced-in.
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March BoJ Preview: The Ukraine crisis’ impact on Japan’s bank sector and global inflationary pressures: The MUFG Global Markets Podcast

The unknowns surrounding the war in Ukraine continue to swirl. USDJPY has risen, along with commodities prices. But risk aversion has supported lower JPY rates, and USDJPY basis has widened. Japanese investors have been covering their USD fund positions ahead of the fiscal year-end, but MoF data shows that foreigners have been cutting their exposure to Japan stocks even as purchase JGB asset swaps. In today’s episode, MUFG Chief Japan Strategist Takahiro Sekido previews the Bank of Japan’s March Monetary Policy Board meeting. He also discusses the impact of the war in Ukraine on Japan’s bank sector and domestic inflationary pressures as shown in corporate prices as well as shares his views on Dollar/Yen, Yen rate, and Yen basis.
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Energy market turmoil drives FX movements: The Global Markets FX Week Ahead Podcast

The impact of Russia’s invasion of Ukraine on energy supply remains the key focus for the financial markets. The impact is resulting in a retracement of the previous huge gains in crude oil and natural gas markets, offering some respite for European currencies like the Swedish Krona and the Euro.
Derek Halpenny, Head of Research for Global Markets EMEA & International Securities, talks to Chris de Sibert, Head of Institutional Investors FX Sales for EMEA, about developments this week, including implications for the Euro after the ECB meeting, outlook for the FOMC and BoE meetings next week, and prospects for the Japanese yen, which is underperforming despite the high levels of uncertainty.
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The largest commodities supply shock in decades: The MUFG Global Markets Podcast

The global economy is now facing its largest commodities supply shock since the 1973 oil embargo. The stratospheric breadth and velocity of the moves in commodity prices since the Russian invasion of Ukraine is structurally altering the contours of policymaking and corporate strategy.
Ehsan Khoman, Head of Emerging Markets Research (EMEA), believes that the permanency of such pivots, with entities lining up to exit Russia and Europe now placing energy security above energy transition priorities, will reshape the landscape for the coming decades.
In the near-term, he holds conviction that with the sheer ambiguity of how the conflict will end, as well as how extreme shortages in energy, metals and the agricultural space will be resolved, the world could be heading into a recession.
 
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What does royalty have to do with MBS prepayment?: The MUFG Global Markets Podcast

In this episode MUFG Head of Prepayment Modeling and Strategy Glenn Schultz discusses the transition of the mortgage prepayment landscape to one dominated by turnover and burnout rather than refinancing. He discusses why he believes that turnover will become the dominant theme in 2022. He takes a balanced look at the specified pool sector, identifying the ‘Kings of extension protection” and “Princes of call protection.” Finally, he discusses his views on the recent widening trend in the current coupon basis.
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