The MUFG Global Markets Podcast

Lee Hardman, Senior Currency Analyst, and Elizabeth Foster, Research Analyst from the Economic Research Office, discuss what has driven the sharp move lower in USD/JPY over the past week. Will downward momentum for the pair continue ahead of the BoJ’s upcoming policy meeting? 

FX volatility has fallen sharply – for some currency pairs to levels not seen since before the Global Financial Crisis.
Derek Halpenny, Head of Research Global Markets EMEA & International Securities talks to Seiko Kataoka-Fisher in Japanese Client Sales about events in the week ahead that might shake the FX market out of this volatility lull, including the semi-annual testimony to Congress by Fed Chair Powell and the ECB policy meeting.
Today MUFG Research also releases its monthly Foreign Exchange Outlook and Derek outlines some key highlights, including the prospects of a BoJ rate hike in March.
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Lee Hardman, Senior Currency Analyst, and Abdul-Ahad Lockhart, Currency Analyst, discuss the performance of G10 FX carry trades at the start of this year.
What are the main downside risks for carry trade performance in the near-term?
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The US dollar hit its highest level of the year this week and Derek Halpenny, Head of Research, Global Markets EMEA & International Securities talks to Jack Greenslade in FX Corporate Sales about the FX implications following the US inflation data and GDP data from Europe and Japan. Derek also discusses the return of USD/JPY to the “intervention zone” above the 150-level and whether these levels are sustainable.

George Goncalves, MUFG Head of U.S. Macro Strategy, and Glenn Schultz, MUFG Head of Prepayment Modeling and Strategy, discuss the January 2024 remittance data as well as the 2024 outlook for prepayment and turnover. They also go over how prepayment turnover is likely to evolve in 2024 and how dislocation in demographics is both observed turnover rates, in addition to home price appreciation and its potential implication on monetary policy going forward.

This week George Goncalves, MUFG Head of U.S. Macro Strategy, discusses the price action since the hawkish FOMC, stronger than expected NFP, hawkish chair Powell 60 minutes interview, and lastly, a higher than expected inflation report. In George’s view the macro and market conditions pre-CPI release were looking too good to be true. George believes that markets were priced for perfection and overdue some level setting after months of nonstop rallying. In the end, the higher CPI sends the Goldilocks crowd a rude reminder that this year will not be a linear progression to a soft-landing outcome, there will be bumps along the way, in our view. This will result in episodic vol.

The USD has continued to rebound over the past week although it’s performance has been mixed against other G10 currencies. Lee Hardman, Senior Currency Analyst talks to Michael Owen, Head of Global Client Desk EMEA, about what have been the main drivers of FX performance over the past week. Will the JPY weaken further after hitting fresh year to date lows? 

Lee Hardman, Senior Currency Analyst, and Reza Nasehi, Vice President of the Japanese Client Sales Group for EMEA in London, discuss what has triggered a more volatile USD this week. Will renewed US regional banking concerns threaten to derail the USD’s rebound? 
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This week George Goncalves, MUFG Head of U.S. Macro Strategy, reviews the key developments in the market as January comes to a close and February begins. We provide our view on the latest changes in government financing estimates and the upcoming jobs report. George walks us through the team’s FOMC preview for the January meeting where we believe that after the December pivot, they are sequencing toward starting an easing cycle soon, in our view.

Derek Halpenny. Head of Research, Global Markets EMEA & International Securities talks to Michael Owen, Head of Global Client Desk EMEA, about the implications of the FOMC meeting and the US jobs report for the US dollar next week and beyond.
Derek also discusses the potential pound impact from the Bank of England meeting and why MUFG Research are highlighting the potential for EUR/GBP to continue breaking lower.
 
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Lee Hardman, Senior Currency Analyst, and Simon Mayes, Head of UK, Ireland and Switzerland, Corporate Sales (FX) in London, discuss what have been the main drivers behind the US dollar’s rebound at the start of this year.
They also discuss the latest policy meetings from the BoJ and ECB in the week ahead.     
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Lee Hardman, Senior Currency Analyst, and Seiko Kataoka-Fisher, Vice President from Japanese Customer Sales for EMEA in London, discuss the key drivers of FX market performance so far this year.
Will market expectations for earlier and deeper major central bank rate cuts be met?
 
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George Goncalves, MUFG Head of Macro Strategy, discusses the 2024 outlook for U.S. credit markets with IG Desk Analyst Andrew Myers and HY Desk Analyst Bill Matthews. They cover topics from the recently published 2024 Desk Strategy Outlook, ranging from corporate bond issuance, key credit themes to watch ahead, and potential credit spread ranges. 

George Goncalves, MUFG Head of U.S. Macro Strategy, discusses the 2024 outlook for the agency MBS sector with Glenn Schultz, MUFG Head of Prepayment Modeling and Strategy and our resident subject matter expert on mortgages. They cover topics from the recently published 2024 Desk Strategy Outlook, ranging from agency MBS issuance, prepayments, and the mortgage basis. They also discuss if "the second golden age of MBS" is still a relevant theme for investors and the agency MBS market. 

This week George Goncalves, MUFG Head of U.S. Macro Strategy, discusses our Macro thesis around the economy and Fed policy. With unemployment low, inflation declining, and spending solid (helped by fiscal policy mid-year), all this resulted in stronger than expected GDP in 2023. The markets also embraced the soft landing narrative in the last two months of 2023. In George’s view, this makes for a hard comparison at the start of 2024. In our view, the long and variable lags from one of the fastest Fed hiking cycle catches up in 2024. This will put the riskier side of the credit spectrum in scope for further adjustment. Net, we are not calling for a hard landing recession but instead something more like a bumpy landing which is short-lived. In fact, a recession altogether could be avoided if the Fed meets or beats what is priced-in for cuts and bank lending rebounds. Yet, due to lags in the recession dating process, we won’t know we’re in one until after the fact. In the end, we stick by our view that the Fed will be starting an easing cycle soon (our base-case is for a 25bp March cut) where they will attempt to soften the decline in economic activity as the year progresses.

The first week of 2024 is coming to an end and following the release of the US employment report, Derek Halpenny, Head of Research Global Markets EMEA & International Securities talks to Michael Owen, Head of Global Client Desk about the impact of the jobs data on the financial markets and why the data is not as strong as it first looked. Derek also outlines MUFG’s Themes of the Year pieces in the January FX Outlook publication and explains the MUFG US dollar view for 2024.
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Lee Hardman, Senior Currency Analyst, discusses the impact on the FX market from building evidence of slowing inflation in the UK & US. How does the BoJ’s reluctance to signal a shift away from negative rates alter the outlook for the yen?

Lee Hardman, Senior Currency Analyst, and Reza Nasehi, Vice President of the Japanese Client Sales Group for EMEA in London, discuss the FX market implications from this week’s major central bank policy updates.
While the Fed opened the door to rate cuts, will the BoJ prepare the ground for a rate hike in the week ahead?
 
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This week George Goncalves, MUFG Head of U.S. Macro Strategy, marks to market the price-action since our last podcast in late November as well as how markets are setup ahead of a key week for central banks. With markets getting ready to closing out another year, how the FOMC event is received will likely set the stage if the risk-on continues into year-end or not. We expect the Fed to push-back on the recent easing of financial conditions and avoid saying anything that might come across as under-writing rate cuts, something that the market is pricing in spades for 2024. With a recent goldilocks jobs report and a slightly higher than expected CPI print, especially with a higher super-core reading (one of chair Powell’s preferred inflation metrics), we do not believe that the Fed will convey a dovish message at the last FOMC meeting of 2023. Lastly, George gives us a glimpse into the themes and framework the team is using in order to setup for the 2024 macro world.

The yen surged this week and Derek Halpenny, Head of Research, Global Markets EMEA & International Securities talks about the yen move, whether the BoJ will hike rates this month and what lies ahead for the yen.
Derek also discusses the heavy schedule of central bank meetings next week, including the Fed and the ECB and what this means for G10 currencies.
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Lee Hardman, Senior Currency Analyst, and Seiko Kataoka-Fisher, Vice President from Japanese Customer Sales for EMEA in London, discuss the FX market implications from the ongoing dovish repricing of central policy expectations. Will the USD sell off extend further in the week ahead?  
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Derek Halpenny, Head of Research Global Markets EMEA & International Securities, talks to Shan Husain, Vice President - Institutional Investors FX Sales EMEA, about the factors behind why the euro has underperformed this week – it was the second worst performing G10 currency this week. Derek also looks to next week with the RBNZ meeting, data from the US and updates on trade views.
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This week George Goncalves, MUFG Head of U.S. Macro Strategy, walks us through some of his latest special topics in the Macro2Markets Monthly Outlook report. As the title suggests, we first explore the risk-on mood on Wall Street and what is driving it. In George’s view, he believes it is a bit premature that some market participants are reading the weaker data and the market-based interest rate declines as a good thing. George wraps up by providing his views on the current developments in bank lending and general credit conditions overall. He also takes us through the big moves that are happening on the U.S. government deficit front and their implications.
 

Lee Hardman, Currency Analyst, and Reza Nasehi, Vice President of the Japanese Client Sales group for EMEA in London, discuss the impact on the FX market from further evidence of slowing inflation in the UK and US. Has the tide turned against the US dollar?
Disclaimer: www.mufgresearch.com (PDF)