The MUFG Global Markets Podcast

The US dollar weaker across all G10 currencies once again

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.
Disclaimer: www.mufgresearch.com (PDF)

U.S. Markets, is risk-on whistling past the bond-yard?: The MUFG Global Markets Podcast

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.
 

FX market fallout from slowing inflation

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)

FX consolidation ahead of key inflation data

The US dollar has recovered some of last week’s losses and Derek Halpenny, Head of Research Global Markets Research & International Securities talks to Michael Owen Head of Global Client Desk EMEA about what helped prompt a recovery of the US dollar this week.
With no single clear driver of FX and rates this week, Derek looks ahead to next week and the key inflation data from the US and employment and inflation data from the UK. Derek also provides an update on Global Market Research’s trade views.
 
Disclaimer: www.mufgresearch.com (PDF)

The MUFG Global Markets Podcast: 2023’s never ending conga line of black swan events

In today's episode, George Goncalves, MUFG Head of U.S. Macro Strategy, and Glenn Schultz, MUFG Head of Prepayment Modeling and Strategy, discuss October's remittance data, relative value against the backdrop of slower seasonal prepayment, and the outlook for the current coupon basis against the headwinds of 2023's never ending conga line of black swan events. 

Is the peak now in place for the USD and US yields?

Lee Hardman, Senior Currency Analyst, and Jack Greenslade from the Global Customer Marketing Group, discuss the main drivers behind the sharp adjustment lower for the USD and US yields over the past week.
Have we now passed the peak of US exceptionalism priced into FX markets?  
 
Disclaimer: www.mufgresearch.com (PDF)

Quick FOMC preview as the BoJ and Q.R.A. take the spotlight: The MUFG Global Markets Podcast

This week George Goncalves, MUFG Head of U.S. Macro Strategy, takes us around the world and back, discussing the latest changes from the Bank of Japan (BoJ), ahead of October month-end trading and the critical double-header events on November 1, when the Treasury releases its quarterly refunding announcement (Q.R.A.) for its Treasury supply needs. Then in the afternoon, the FOMC meets for its second to last meeting of calendar year 2023.
In George’s view, so long as term premia stays elevated and 10yr rates do not decline back towards the low 4s, these higher long-term rates are doing the tightening for the Fed, and thus the Fed hiking cycle is likely over (where the July hike may end up being the last hike of this cycle). In addition, what is frightening about October 31, other than the spooky Halloween scenes, is that this means there are only two months left in the year and liquidity probably gets worse for markets from here on out. Lastly, George wraps up by providing his views for Fed day, expecting another “hawkish skip”, the second in a row, and that chair Powell will refrain from saying they are done by keeping December in play.

FX vol could spike with busy week ahead

Swings in the 10yr UST bond yield reverberated into the FX markets this week with the EUR/USD intra-day high-low weekly range the widest since mid-July. Derek Halpenny, Head of Research, Global Markets EMEA & International Securities, talks to Simon Mayes, Head of UK, Ireland and Swiss Corporate Sales, about the continued resilience of EUR/USD and what might be behind it. Derek also looks ahead to next week with the BoJ, FOMC and BoE all meeting and explains why the BoJ needs closest watching after USD/JPY broke higher through 150 this week.
Disclaimer: www.mufgresearch.com (PDF)

New highs for US yields but not the USD

Lee Hardman, Senior Currency Analyst, and Andrea Hayward, Vice President of the Japanese Client Sales Group for EMEA in London, discuss how rising Middle East tensions and higher US yields are impacting the FX market. Will the upcoming BoC and ECB policy meetings prove to be market-moving in the week ahead?

The State of Housing Edition: The MUFG Global Markets Podcast

This week in a special edition podcast episode, George Goncalves, MUFG Head of U.S. Macro Strategy, is joined by Glenn Schultz, MUFG Head of Prepayment Modeling and Strategy, to go over a recently published and comprehensive Desk Strategy Report called “The State of Housing” where they explore the impact of high mortgage rates and affordability issues that are impacting the U.S., as well as the potential lasting effect on housing and mortgage macro fundamentals ahead.
George walks through how these higher rates are unsustainable for a viable housing and mortgage financing market and unless incomes were to rise, and rise at a much faster rate, that something has to give (either house prices decline, and/or rates decline). Glenn threads in the implications to MBS issuance, CPRs, and how the market might be the most negative convexity it has been given the larger loan balances. George wraps things up by discussing how this might influence the Fed rate views and their MBS portfolio.
 

Geopolitics vs Macro in the Week Ahead

The week is coming to a close with signs of risk aversion with the focus on the Israel conflict and the risk of this broadening in the region. Derek Halpenny, Head of Research Global Markets EMEA & International Securities talks to Michael Owen, MUFG's Head of Global Client Desk for EMEA in London, about the possible consequences for the markets and why recent signs of a pick-up in economic activity in China could prove important for the US dollar.

Are US yields and the USD closer to peaking out?

It has been a more volatile week in the FX market. Lee Hardman, Currency Analyst, and Simon Mayes, Director of MUFG’s Global Customer Marketing Group for EMEA in London, discuss how the sharp sell-off in the US bond market is spilling over into the FX market.
Will the USD continue to head higher alongside US yields in the week ahead?
Disclaimer: www.mufgresearch.com (PDF)

Rates up, risk down, macro influx (same as it ever was)…

George Goncalves, MUFG Head of U.S. Macro Strategy, walks us through the latest price action where the normalization of rates out the curve has finally caught the attention of broader markets like stocks and credit. The so-called bear steepening of the curve (when long-term rates move higher in yields and in a quantum larger than short-term rate movements) is driving some serious financial conditions tightening. As George says, the bond market is tightening for the Fed. George still believes that the last Fed hike was in July and that all of these volatile market moves will result in them no longer hiking in 2023. That said, until long-term rates find stability (and better yet consolidate into a tradeable range) and until the U.S. dollar stops going up, these major swings may continue in his view. In the past, to see a quick reversal in U.S. Treasuries, there would need to be a much larger and deeper risk-off in stocks and credit. Overall George remains cautious and reminds us that it’s been “the same as it ever was”, higher rates do matter.

USD weakens. What will a government shutdown bring?

The US dollar has corrected weaker into the end of the week. Derek Halpenny, Head of Research Global Markets EMEA & International Securities, talks to Michael Owen, Head of Global Client Desk EMEA, about the factors behind the correction weaker for the dollar and why the government shutdown could reinforce the move over the short-term.
Derek also discusses the latest trade ideas published in the FX Weekly.
Disclaimer: www.mufgresearch.com (PDF)

Assessing the fallout for the FX market for the busy week of G10 central bank updates

Lee Hardman, Senior Currency Analyst, and Abdul-Ahad Lockhart, Currency Analyst in London, discuss the main takeaways from this week’s G10 central bank policy meetings.
 
Has the case for a stronger USD been reinforced?  

September 2023 FOMC Preview and Market Implications

George Goncalves, MUFG Head of U.S. Macro Strategy, returns to review the price action since the summer break and what to expect from the FOMC at the upcoming meeting. George views the current environment as the most challenging for bond bulls, as the longer the Fed stays on hold with all this additional Treasury supply hitting the market, the pull toward higher rates will remain a powerful force. Granted, George does not believe that the window that will be afforded to the Fed staying “higher for longer” will be one that is long enough to fully normalize the yield curve towards the current level of Fed funds (because we expect the policy lags to hit the economy hard in Q4 into 1Q24). That said, the Fed can still use forward guidance signals, such as keeping their rate forecast “dot-plot” higher as a counter-balance to a bond market that is always looking for the next reason to rally. In terms of the FOMC meeting, we expect a slightly hawkish outcome, where the dots will try to pave the way for the Fed to signal they want rates to stay higher. Lastly we expect no change in actual Fed rate policy, a hawkish skip (i.e. no hike at this meeting) is our base-case.

No stopping the USD rally after a temporary setback

Lee Hardman, Senior Currency Analyst, and Andrea Hayward, Vice President of the Japanese Client Sales Group for EMEA in London, discuss what has been behind a volatile week for the USD.
They also discuss how the latest central bank updates from the BoE, BoJ and Fed in the week ahead are likely to impact the FX market.  

Response to the question ”Who is Going to buy MBS” | The MUFG Global Markets Podcast

In this month’s episode, MUFG Head of Prepayment Modeling and Strategy, Glenn Schultz, discusses August's prepayment data and answers the question of whether the Spring/Summer selling season prepayment data indicate a structural shift in the agency MBS market back to the “old normal”. He also addresses the question “Who is going to buy Agency MBS?” and how issuance will influence the agency MBS basis going forward.

What’s next for China’s economy & CNY? | The Global Markets FX Week Ahead Podcast

Lee Hardman, Senior Currency Analyst, and Lin Li, Head of Global Markets Research Asia, discuss the outlook for China’s economy and the renminbi.
With USD/CNY just hitting the highest level since 2007 is this the start of another leg lower for the renminbi? What are the potential spill-overs for the global economy and FX market? 

US jobs data no gamechanger for FX and rates | The Global Markets FX Week Ahead Podcast

Following today’s employment report from the US, Derek Halpenny, Head of Research for Global Markets EMEA & International Securities talks to Matthieu Gloux, Head of Global Client Sales for EMEA, about the implications for the dollar and whether the data changes the outlook for Fed policy.
Derek also highlights the changes to MUFG’s US dollar forecasts following the release today of the monthly Foreign Exchange Outlook publication and updates listeners on the MUFG Research trade ideas.

Will the USD rally continue beyond Jackson Hole?

Lee Hardman, Senior Currency Analyst, and Jack Greenslade from the Global Customer Marketing Group discuss the main drivers of the USD’s strong rebound over the summer. Is the USD rally likely to extend further beyond Jackson Hole?

US dollar bullish bias intact – China and Powell in focus | The Global Markets FX Week Ahead Podcast

The increased focus on China and the potential fallout from a continued weakening of growth and missed payments linked to property market losses played a key role in driving markets this week.  
Derek Halpenny, Head of Research, Global Markets EMEA & International Securities talks to Simon Mayes, Head of UK, Ireland and Swiss Corporate Sales, about the increased influence of CNY in the FX markets and why these developments and other factors remain supportive for the US dollar. Derek looks ahead to next week and the Jackson Hole Symposium and the possible risks of intervention in USD/JPY.

U.S. Fiscal Perspectives and Views thru Labor Day

George Goncalves, MUFG Head of U.S. Macro Strategy, reviews the recent Fitch downgrade of the U.S. credit to AA+ and compares it to the first downgrade by S&P roughly 12 years ago. He believes this time the backdrop is different given that the debt loads are even larger now and the Fed has rates much higher versus back then when rates were anchored by the near zero rate policy of that time period. Market reactions thus far are also different versus the first downgrade too. The other issue is that the Fitch downgrade occurred during a week when the Treasury was announcing the need to issue more debt and increase the auction sizes of Treasury securities. George has been highlighting that the sequence from the Fed to the BoJ tweaking YCC and then more UST debt, all of which have largely come to fruition as per George’s views, should result in rates in the middle of the yield curve (known as the belly and/or intermediate rates) would do most of the adjustment higher. So far that is what we have seen with 10s now well above the 4% level. Lastly, George looks forward and discusses why NFP, which is always important, but unless it breaks the string of weaker NFP reports of late, than the Fed is likely to skip in September.  

US inflation softer, but yields & USD higher – what’s going on? | The Global Markets FX Week Ahead Podcast

Following another favourable US inflation report this week, Derek Halpenny, Head of Research Global Markets EMEA & International Securities talks to Shan Husain, Vice President, Financial Institutional Sales EMEA, about the financial market reaction to the data and what it means for the US dollar and rates going forward. Derek also looks ahead to next week which will see the focus on inflation turn to the UK.