The MUFG Global Markets Podcast

June FOMC Preview: A skip is in store but all about the messaging...

George Goncalves, MUFG Head of U.S. Macro Strategy, returns to highlight the scenarios he is expecting at the upcoming June FOMC meeting and the potential market implications. George thinks the aim will be to deliver a hawkish skip, will the markets hear that or something entirely different is what we will be trying to assess. Post Fed we think markets should turn their attention from inflation fears and central bank action towards the growth outlook. We believe quarter-end/month-end has the potential for some early fireworks before we get into the start of summer.

Japanese lifer earnings, cross-border securities flows and the June BoJ meeting – The MUFG Global Markets Podcast

The Nikkei Average remains well bid while USDJPY feels a bit more top-heavy. In contrast JPY rates and JPY basis remain little changed.
In today's episode, MUFG Chief Japan Strategist Takahiro Sekido discusses Japanese life insurance company fiscal year 2022 earnings, International Transactions in Securities data and the upcoming BoJ policy meeting. He also shares his views on spot Dollar/Yen, Yen rates, and Yen basis.
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Will the Fed reinforce USD sell-off? The Global Markets FX Week Ahead Podcast

Lee Hardman, Senior Currency Analyst, and Seiko Kataoka-Fisher, Vice President for Japanese Customer Sales for EMEA in London, discuss the potential impact of the upcoming FOMC meeting on USD performance.
Will the Fed follow in the footsteps of hawkish policy surprises delivered by the BoC and RBA over the past week?
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Exploring liquidity dynamics that may supercharge the Fed’s tightening efforts during the summer…

With the debt ceiling resolution behind us, George Goncalves, MUFG Head of U.S. Macro Strategy, returns to recap what feels like a market that is in a holding pattern until the passage of the CPI print and the FOMC meeting. He also discusses the medium-term risks with a keen focus on liquidity dynamics. The Treasury will be replenishing its General Account (TGA), which sits on the Fed's liability side of the balance-sheet via raising cash from T-bill issuance. At a minimum, this will likely result in a crowding out effect and at a maximum level, drain market liquidity. Given some areas of the banking system remain fragile and in need of funding, it’s critical to watch how this plays out over the summer. With QT ongoing and the Fed aiming to keep rates higher for longer, this liquidity story can supercharge the Fed’s tightening efforts ahead.

The Nikkei flirts with valuations not seen in over a generation as the Yen depreciates while Yen rate and basis remain highly unchanged – The MUFG Global Markets Podcast

The Nikkei Average continues its upward climb. USDJPY has kept pace, topping the 140-mark. On the other hand, JGB yields and JPY basis have remained little changed.
In today's episode, MUFG Chief Japan Strategist Takahiro Sekido reviews asset price developments during May and looks ahead to June based upon BoJ monetary policy and fiscal and monetary fund flows. He also shares his views on spot Dollar/Yen, Yen rate, and Yen basis.
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The Elephant in the Room – US Long-term Debt Outlook | The MUFG Global Markets Podcast

Following the stronger than expected US jobs report, Derek Halpenny, Head of Research, Global Markets EMEA and International Securities discusses with Julie Ellert, Head of Frabelux FX Corporate Sales, what the implications are for the US dollar and the FOMC meeting later this month.
Derek also outlines what he calls “the elephant in the room” following the debt ceiling deal – that is the terrible long-term debt outlook for the US. This issue will have to be tackled in the coming years which point to weaker growth and a weaker US dollar.

The USD is bouncing back - is there anything that can stop it? The Global Markets FX Week Ahead Podcast

Lee Hardman, Senior Currency Analyst, and Seiko Kataoka-Fisher, Vice President of Japanese Customer Sales for EMEA in London, discuss the turning around of the USD and whether it is likely to continue in the week ahead of the US debt ceiling crescendo.
However, the biggest, hawkish repricing of central policy has been in the UK. How does this impact the pound?
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Debt ceiling impasse shall pass but is it distracting us from other larger risks ahead?: The MUFG Global Markets Podcast

George Goncalves, MUFG Head of U.S. Macro Strategy, returns to give us an update on the current status of the debt ceiling negotiations. He explores scenarios of how this impasse may conclude and potential market implications. George also takes us through his latest Fed thinking, taking into account all of the recent Fed speakers. He also provides us with a mini-preview of what to expect at the June FOMC meeting. George looks further down the road on how the Fed may shift towards easing and what to do with QT and the supersized RRP. Lastly, if that was not enough to get one’s arms around, George provides a list of what else is on his risk radar.

Strength in the Nikkei and Dollar/Yen stand in sharp contrast to lackluster price action in JGBs and cross-currency basis: The MUFG Global Markets Podcast

The Nikkei Average and Dollar/Yen keep climbing higher. Meanwhile, Yen rate and Yen cross-currency basis remain little changed. Now that the G7 Summit in Hiroshima is over, speculation about whether Prime Minister Fumio Kishida will disband the Lower House and call for elections is growing.
In today's episode, MUFG Chief Japan Strategist Takahiro Sekido gives his view on triggers in the wake of the G7 Summit in Hiroshima as well as his analysis of the latest April JSDA data. He also shares his outlook for spot Dollar/Yen, Yen rate, and Yen basis.
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Is USD strength sustainable? The Global Markets FX Week Ahead Podcast

Optimism of a deal being agreed to lift the debt ceiling in the US has helped lift the dollar this week. Derek Halpenny, Head of Research, Global Markets EMEA and International Securities, explains to Shan Husain, Vice President, FI FX Sales, why he remains unconvinced over the sustainability of the move stronger for the dollar and expects the positive momentum to fade.
Derek looks ahead to next week with UK inflation also in focus which will be key for the outlook for the pound.
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How will political developments impact monetary policy in Japan?: The MUFG Global Markets Podcast

Dollar/Yen is higher, Yen rates are little changed, and Yen cross-currency basis has started to widen slightly. Major Japanese banks have released their FY23 earnings results in mid-May, to be followed by major lifers. Bank of Japan Governor Kazuo Ueda will be watching financial system stability as he determines his next monetary policy steps.
In today's episode, MUFG Chief Japan Strategist Takahiro Sekido discusses recent political developments, cross border flows, and implications for financial markets. He also shares his views on spot Dollar/Yen, Yen rate, and Yen basis.
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The Kings of Carry, Convexity Cross, and U.S. Debt Ceiling Brinksmanship: The MUFG Global Markets Podcast

In today’s episode, MUFG Head of Prepayment Modeling and Strategy, Glenn Schultz, reviews April remittance data highlighting the ‘Kings of Carry’ and relative value around the convexity cross, and the outlook for the agency mortgage basis given the FDIC liquidations current U.S. budget negotiation. He also discusses the possible implications of the debt ceiling brinksmanship on both the GNMA and Conventional MBS sectors.
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What’s behind the USD rebound? The Global Markets FX Week Ahead Podcast

Lee Hardman, Senior Currency Analyst, and Michael Owen, Head of Global Client Desk EMEA, discuss the USD’s recent performance and Bank of England’s policy update. After a better week for the USD, is the tide beginning to turn?  
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What to expect as Japan returns from Golden Week – The MUFG Global Markets Podcast

During Golden Week, the FOMC held its May meeting while the US regional bank sector remained riddled by credit concerns. Despite all that, the lower side of the USD/JPY was solid and the rise of Yen interest rates and widening of Yen basis were limited. If investment flows from Japanese investors pick up after Golden Week as we expect, USD/JPY, Yen interest rates, and Yen basis will become more volatile.
In today's episode, MUFG Chief Japan Strategist Takahiro Sekido reviews the JSDA data for March, as well as April fiscal and BoJ fund flows and implications. He also shares his views on spot USDJPY, Yen rates, and Yen basis.
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Is the outlook worsening for the USD? The Global Markets FX Week Ahead Podcast

Lee Hardman, Senior Currency Analyst, and Jack Greenslade from the Global Customer Marketing Group, discuss the key takeaways for the FX market covering the latest policy updates from the Federal Reserve and European Central Bank.
The Bank of England is the next major central bank to update policy in the week ahead but will it alter the pound’s bullish momentum? 
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May FOMC Preview, the last 25bp hike as attention turns to the debt ceiling?: The MUFG Global Markets Podcast

George Goncalves, MUFG Head of U.S. Macro Strategy, thinks that given the macro to markets setup, the Fed shouldn’t be hiking at this point, but they likely will, so long as the rates market is pricing in over a 75% chance of rate hike come the time of the May FOMC rate decision meeting conclusion. Thus, the Fed is on track to deliver another 25bp hike and take up the range for the Fed Funds target rate to 5-5.25%. That said, he also believes that this could ultimately be the last hike of what was one of the most aggressive Fed hiking cycles in recent history.
The continued slide lower in U.S. economic activity with ongoing improvements in inflation measures, coupled with renewed banking turmoil and a more pressing U.S. debt ceiling impasse ahead warrants a pause, but again the Fed will likely hike at the May meeting. Therefore, Chair Powell will try to convey a neutral message and not sound overly hawkish or dovish at this juncture. We expect the presser to be dominated by regional bank concerns, especially after witnessing another bank failure this year (and the third such bank failure happened days before the FOMC decision).
Overall, the Fed’s rate path from here is fraught with many challenges. For example, until financial conditions worsen (which we believe they will into the 2nd half of 2023) and/or if there were to be a cascading of bank related trouble in the near future, unless things are glaringly and perpetually bad, the Fed will try to look past the recent bank failures. Reason being is that they want to push back on the market pricing of rate cuts and hold the line – conveying that they are planning to hold rates “higher for longer” to ensure all these rate hikes are working at wrestling inflation closer to their 2% target. The tricky part will be that holding rates at these even higher rates levels will likely expose further weakness in the banking system and potentially the private credit sector as well.Net, we won’t know for sure if this is the last rate hike – that will hinge on their assessment that enough has been done. The markets still have to contend with NFP and CPI ahead (which depending on the messaging from the Fed and the outcome of this upcoming data batch, could re-introduce some rate hike pricing into June). However, in our view the outlook will likely worsen from here and uncertainty may go up a lot if the debt ceiling process is taken down to the wire. If so, the key thing to watch post FOMC will be how Fed speakers react to the data and debt ceiling developments. 
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Small but significant changes at the Ueda-led Bank of Japan – The MUFG Global Markets Podcast

The Bank of Japan voted to keep monetary policy unchanged at the April Monetary Policy Board meeting, but also made some significant changes including ending its forward guidance for rates and strengthening its outlook for inflation. New Governor Kazuo Ueda started his term by announcing a comprehensive review of BoJ monetary policy, we believe differences between the new and previous BoJ Governor are slowly becoming apparent. USDJPY is up and JPY rates down. This price action is consistent with Japanese life insurance company fiscal year 2023 investment plans which were released last week.
In today’s episode, MUFG Chief Japan Strategist Takahiro Sekido reviews the April Bank of Japan meeting, discusses Japanese life insurance company investment plans and shares potentially triggers for Japanese markets in May. He also shares his views on spot Dollar/Yen, Yen rates, and Yen basis.
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Will the recent USD strength be tested? The Global Markets FX Week Ahead Podcast

The dollar advanced toward the end of the week before weakening into the London close. This was a good reflection of a choppy week of trading and Derek Halpenny, Head of Research Global Markets EMEA, talks to Simon Mayes, Head of UK, Ireland and Swiss Corporate Sales, about whether the large USD/JPY jump after Governor Ueda’s first BoJ policy meeting can be sustained.
Derek also looks ahead at the dollar’s prospects, with particular focus on the FOMC and ECB meetings taking place next week.
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BoJ Governor Ueda’s first policy meeting – The MUFG Global Markets Podcast

The unified local elections are nearing an end, with strong showings by ruling party candidates. With no discernable upward stress on JPY rates, the Tokyo market clearly expects Bank of Japan Governor Kazuo Ueda to take his time adjusting monetary policy.
Yen cross-currency basis and Dollar / Yen have been relatively stable. In today’s episode, MUFG Chief Japan Strategist Takahiro Sekido discusses the Lower House elections and shares his outlook for the Bank of Japan meeting this week. He also shares his views on spot Dollar / Yen, Yen rates, and Yen basis.
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How will domestic political events and BoJ policy meeting impact JPY performance? The Global Markets FX Week Ahead Podcast

Lee Hardman, Senior Currency Analyst, and Andrea Hayward, Vice President of the Japanese Client Sales Group for EMEA in London, discuss implications for the JPY from the Bank of Japan’s upcoming policy meeting and domestic political events.
They also discuss why the USD's recent rebound is unlikely to be sustained against other major currencies.
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Combating climate change and supporting transition financing: The MUFG Global markets Podcast

In today’s episode and ahead of Earth Day this weekend, Dr. Tobi Petrocelli, MUFG Head of Sustainability & Transition Finance Strategy, and Beth Gilroy, Deputy Head of Sustainability & ESRM, discuss how MUFG is helping to resolve environmental and social issues focusing on combating climate change and supporting transition financing. We also review two key publications – our recently released MUFG Progress Report, which illustrates how we as a global institution are moving towards carbon neutrality and our MUFG Transition Whitepaper, which was published last October, in which we share our sustainability views globally and summarize the decarbonization efforts of Japanese companies as well as the energy policy of Japan.  
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Stability returns but too soon to say the coast is clear…:The MUFG Global Markets Podcast

George Goncalves, MUFG Head of U.S. Macro Strategy, is encouraged that stability has returned to the broader financial marketplace and the banks in particular, but he believes that it’s too soon to say the coast is clear. In his view, without a new negative catalyst, it’s understandable to see markets and policymakers return to their concerns over where we are in the inflation versus growth debate. And it’s true that vols in the broader asset classes have receded from the extreme levels seen in March. The concern is that after having witnessed some of the biggest moves in history, they can always come back and be disruptive once more. We think the markets have through the process of having less conviction on the macro outlook become a bit complacent as they wait for the next catalyst. However, we might need to wait until the conclusion of the upcoming Fed & ECB meetings in May before we get some clarity on where we truly are in the economic and liquidity cycle. Meanwhile, the debt ceiling concerns are growing and wait in the wings once the central bank meetings conclude. We remain cautious heading into summer.
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Have securities flows in and out of Japan reached an inflection point?: The MUFG Global Markets Podcast

The Yen has weakened at the start of Japan’s new fiscal year while Yen rates and Yen cross currency basis have lacked momentum. The assassination attempt on Prime Minister Fumio Kishida over the weekend was shocking but did not elicit a major reaction in Japanese financial markets.
In today’s episode, MUFG Chief Japan Strategist Takahiro Sekido reviews recent price action and cross border security flows in March, as well as changes in market structure of the Tokyo market. He also shares his views on spot USDJPY, Yen rates, and Yen basis.
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US inflation data leaves USD on weak footing: The Global Markets FX Week Ahead Podcast

The week is closing out with the US dollar rebounding from a low point not seen since April 2022. Derek Halpenny, Head of Research, Global Markets EMEA & International Securities, discusses with Michael Owen, Head of Global Client Desk EMEA, about what drove the dollar to the lows this week and what lies ahead for the dollar.
Derek also discusses the outlook for the pound ahead of a busy week of economic data that will shape expectations for the BoE MPC meeting in May. 
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