Global Markets Podcasts

Over the past four weeks, the FOMC continues to deliver what appears to be a forceful, seminal shift in their monetary policy framework. The Committee has strengthened its maximum employment mandate, elevating its stature to be a vibrant, durable, broad-based, and inclusive one. 12 years of erroneous predictions has inclined the pragmatic Chair Powell to dispose of many of the features of the Phillips curve thinking within the Fed’s inflation models and to relegate it’s importance upon the indicator dashboard. This shifting of emphasis within the new framework likely may lead the U3 unemployment rate to decline all the way to 2.604% by year-end 2024 (a 100-year low!) – according to our models forecasts. Still, there remain many unanswered questions, but a deeper understanding of the new framework is a must for any investor.

In this episode, MUFG U.S. Rates Strategist, John Herrmann, continues to try to enhance listeners’ understanding of the Fed's new framework.

A mix of cross-currents are threatening to turn the tide for the FX markets. COVID-19 is back in focus in the UK, with the growing likelihood of new lockdowns sending the pound into underperformance.

The threat of negative interest rates is also looming, and Derek Halpenny, Head of Global Markets Research for EMEA, gives his forecast for when these could be potentially implemented. Stateside, the passing of Justice Ruth Bader Ginsburg has opened a seat on the Supreme Court, giving way to an escalation in partisan politics. What does this mean for the dollar? Listen below for more.

The bar surrounding the peak in oil demand is rising with discussions this week on whether the peak in oil demand has already been reached, with prospects that global oil consumption possibly may never return to pre-pandemic levels.

Ehsan Khoman, Head of MENA Research and Strategy, contextualises how increasing energy efficiency, the electrification of road transportation and climate change considerations are altering the contours of the oil industry and what this could signal for oil prices.

The FOMC recently concluded its first meeting under the new monetary policy framework announced less than a month ago. As expected, the meeting was a seminal one! Chair Powell and the rest of the Committee sent a powerful message that they will target inflation above 2% for "some time" to achieve its new "average" goal. That's significant, especially when maximum employment means more than just a low U3 unemployment rate. How is an investor to navigate these uncharted waters?

In this episode MUFG US Rates Strategist, John Herrmann, breaks down the September FOMC meeting in light of the Fed's new monetary policy framework and tells listeners what it means for his core strategic investment stance for a 2s-30s Treasury yield curve steepener.

It was only a little over a year ago that Emperor Naruhito acceded to the Chrysanthemum Throne, beginning the Reiwa era. This week marks yet another new period for Japan, following the election of Yoshihide Suga as leader of the Liberal Democratic Party this past weekend. Japan’s next Prime Minister will be announced on September 16 and a new Cabinet launched. USDJPY has traded in a narrow range recently. With the Obon summer holidays over, Japanese and overseas investor flows have been oddly mixed and balanced ahead of the end of the quarter, and market pricing has remained in a narrow range.

In this episode, Takahiro Sekido, Chief Japan Strategist of Global Markets Research, MUFG Bank Tokyo discusses Japan’s new administration, cross-border flows, and his views on USDJPY and JPY rates and JPY basis.

The pound took a big hit last week as no-deal Brexit fears built, bringing a period of GBP outperformance to an abrupt end. As UK-EU negotiation tensions continue and with the UK government threatening to override the Brexit withdrawal deal, Lee Hardman, currency analyst, gives his take on what is in store for sterling.

Over the pond in the U.S., the FOMC convenes this week; looser monetary policy is on the cards, but listen to hear how various scenarios may play out in the markets.  

An ambitious plan for clean energy and climate change under a Biden presidency has far-reaching implications for global oil markets.

Ehsan Khoman, Head of MENA Research and Strategy, hones in on how a Biden administration could alter the contours of global oil markets and discusses his expectations for oil prices under various scenarios.

August total non-farm payrolls came in at +1,371K mom, near to the consensus estimate of +1,350K mom but shy of our models forecast of +1,576K mom. Details of the establishment survey suggest that systematic sampling features may have biased down the reported payroll gain by 300K to 400K. It is likely that the employment gain, as calculated by the household survey, of +3,756K mom is a more reliable indicator of the direction and strength of the employment recovery. Accordingly, in our models calculations, the U3 unemployment rate is tracking a 7.25% outcome by year-end 2020, with risk towards 6.95%. By year-end 2021, the U3 rate likely may track 4.92%, and by year-end 2022, the U3 rate likely is tracking 3.74%. Simply remarkable!

In this episode MUFG US Rates Strategist, John Herrmann, reviews the August employment report, including his forecasts for non-farm payrolls and the unemployment rate versus the actual results. He also explores the implications of the number on his outlook for the economy, the yield curve, and the Fed.

Even though Prime Minister Shinzo Abe’s resignation in August came as a surprise, the impact on JPY market was limited. Accordingly, remain cautious of JPY rates rising, USDJPY falling, and JPY basis taking on a widening bias. We expect to revisit these views as the next administration’s lineup and its policy stance unfold in mid-September. Ahead of that, the Japanese Ministry of Finance Balance of Payments data for August suggest the new administration’s first order of business may be fiscal spending.

In this episode, Takahiro Sekido, Chief Japan Strategist of Global Markets Research, MUFG Bank Tokyo discusses Japan’s monetary base, JPY fund supply and demand, the Tokyo repo market, cross-border flows, and his views on USDJPY and JPY rate and JPY basis.