Global Markets Podcasts

This week George Goncalves, MUFG Head of U.S. Macro Strategy, walks through the ever evolving reaction function from the Fed, where George isn’t terribly concerned about the recent Fed hawkish comments. George feels that this has been standard operating procedure, where the Fed tries to calibrate their message after a FOMC meeting. What we learned at the March FOMC is still important, the Fed is increasingly focused on their dual-mandate and will react to labor market weakness just as it would to changes for the path for inflation. George also walked through a special topic theme from the latest Macro2Markets Monthly report, the topic being how healthy is the consumer and are there signs of the wealth effect at work post the recent large rally in financial assets. Lastly George gave a mini-NFP preview.

George Goncalves, MUFG Head of U.S. Macro Strategy, gives us an update on his latest view since his last podcast and highlights what is driving market sentiment and views lately. George then walks us through the March FOMC preview report, focused on what is our base-case and risks around our views into and out of the Fed meeting. George believes Chair Powell will aim to sound neutral as the market has already priced-out a lot of the recent cut expectations and the data trends remain mixed.

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.

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.

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.
 

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.

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.