Global Markets Podcasts

USDJPY dropped following the announcement of Prime Minister Abe’s resignation last Friday. Although the decline in USDJPY was limited compared to the scale of Nikkei Average drop, since higher US yields catalyzed Japanese investor buying of foreign bonds, thus supporting USDJPY downside. Political risk will only increase through mid-September. Not only USDJPY and JPY rates, but also the Nikkei Average will be prone to these risks, and Japanese investment flows are likely to stay active.

In this episode, Takahiro Sekido, Chief Japan Strategist of Global Markets Research, MUFG Bank Tokyo discusses the impact of Abe’s resignation on markets and cross-border flows as well as updates of his view on the Yen, Yen rates, and Dollar/Yen cross-currency basis.

Oil prices are flirting at the top of their multi-month trading ranges, driven by supply apprehensions caused by Hurricane Laura. This extends an extremely active Atlantic hurricane season which, worryingly, still has a couple of months to run.

Ehsan Khoman, Head of MENA Research and Strategy, discusses the impact of seasonal hurricanes and tropical storms on oil markets, and puts them into the current context of the already precarious COVID-19 developments on the demand-side of the oil equation.

The FOMC’s economic projection for 2020 was especially pessimistic at their June 9-10 meeting, leading some Staff to examine the suitability of super accommodative policies, such as negative interest rates or yield curve control. Since that meeting, the outcomes of U.S. economic data has been strong, easily beating the consensus estimate. Our models currently forecast growth of +29.00% over the third quarter, with a carry on growth of +2.00% in the fourth quarter, or possibly stronger. If our forecast proves accurate, then real GDP growth is significantly outpacing either the consensus estimate or the FOMC’s core projection. At what point will Wall Street and the FOMC catch up to our model’s forecast for the economy? Perhaps at the Jackson Hole Symposium? And, in this dynamic environment, is it likely that Chair Powell proves not to be as uber-dovish as forward markets and many strategists suggest? In this episode, MUFG Rates Strategist, John Herrmann, previews this week’s virtual Jackson Hole Symposium and discusses what our model is currently forecasting. He also gives listeners an update on his core strategic investment stance of a 2s-30s yield curve steepener.

The trend of dollar weakness and euro gains could be at an end, according to Derek Halpenny, Head of Research for Global Markets EMEA. This week, Derek looks at the prospects for EUR correction as the markets begin to show concern about evidence of a worsening COVID-19 situation in Europe and also gives his outlook for potential dollar recovery. Are key U.S. events this week, the Republican National Convention and Jackson Hole gathering, going to move the markets?

We tee up the likely tone of the Federal Reserve’s virtual Jackson Hole conference next week, by reviewing our forecasts for the key cyclical, macro-economic indicators of the U.S. economy. Then, we review our long-held forecasts over the structural imbalances of the economy, arguing that the persistence of those imbalances require even more forceful policy stimulus from fiscal and monetary authorities. If the political pendulum swings on November 3rd to the Democratic Party, in the Presidency and the Senate, then we anticipate another +2.650 trillion fiscal stimulus by February 2021. U.S. stock markets might advance to never before seen levels next year upon the resilience of the economy, the massive stimulus, and a vaccine(s) at some point over the coming 18 months. In this episode, MUFG Rates Strategist, John Herrmann, reviews forecasts over the coming 12 months and beyond and tells listeners what these structural imbalances might ultimately require. He also offers more insights on the upcoming U.S. election and gives listeners an update on his core strategic investment stance of a 2s-30s yield curve steepener.

Crude oil prices north of US$40/b is enough to bring shut-in US shale oil production back online, but not enough to drill new wells and offset base declines.

In this week’s podcast, Ehsan Khoman, Head of MENA Research and Strategy, examines prospects for the shale oil industry and highlights the price level where the economics meaningfully works.

It’s not just the annual summer slowdown that is to blame for a drop in the level of trading activities in crude future contracts, which are currently the lowest they have been since 2014.

Ehsan Khoman, Head of MENA Research and Strategy, speaks on this week’s podcast on some of the market movements we have seen over the last six weeks, and how the recent flattening in prices is clouding the future direction of the market.

Payroll gains in July were solid at +1.763mm, higher than consensus estimate (+1.500 million) but close to our forecast of +1.650mm. Similarly, GDP was better than consensus expectations of -34.8% but close to our -32.5% forecast. Moreover, we expect another better than consensus GDP print in the 3rd quarter and for the year-end U3 unemployment rate to be near 8.39%. If that's the case, why are we so worried about the outlook for employment and growth going forward?

In this episode, MUFG Rates Strategist, John Herrmann, reviews July employment and Q2 GDP reports and tells listeners what these mean for the labor market and growth going forward. He also offers his take on the upcoming U.S. election and gives listeners an update on his core strategic investment stance of a 2s-30s yield curve steepener.

Please note this podcast was recorded prior to Joe Biden announcing Kamala Harris as his VP.

The 2020 election is less than 90 days away, and voting will begin in some states as early as next month. With the continued impact of the coronavirus, former VP Biden has maintained a lead over President Trump, but as the general election campaigning heats up, a number of upcoming events could impact the dynamic.

In this episode, Hana Rudolph, of MUFG’s Washington DC Representative Office, examines current dynamics of the 2020 election outlook: how Biden’s VP pick, the upcoming party conventions, and presidential debates could impact the race, and what investors should pay attention to in the months ahead. 

USDJPY has recovered to the 106 level so far in August. However, DXY shows that US dollar weakening trends remain intact. Globally, equity prices are firm and market sentiment is unlikely to drive JPY strengthening, but USDJPY could still fall because of seasonal cash repatriation factors. Japanese investors’, as well as Japanese companies’, flows for JGBs and foreign govies tend to be weak ahead of the Obon summer holidays.

In this episode, Takahiro Sekido, Chief Japan Strategist of Global Markets Research, MUFG Bank Tokyo discusses cross border flows, tight JPY swap and basis swap spreads, and updates on his view of the Yen, JPY rates, and JPY cross-currency basis.