In this regular podcast series, MUFG subject matter experts within our business discuss the forces, indications, and policies that impact the U.S. economy and financial markets, and provide updates to their economic outlooks and forecasts for the weeks, months, and years ahead.
Amamiya, now I really know, my my, I could never let you go
In today’s episode, MUFG Chief Japan Strategist Takahiro Sekido discusses the BoJ leadership nomination, cross border securities flows, and shares his views on spot Dollar/Yen, Yen rate, and Yen basis.
Turnover Limbo and the Lock-In Effect: How Low Can It Go
In today’s episode, MUFG Head of Prepayment Modeling and Strategy, Glenn Schultz discusses the lock-in effect, turnover, and existing home sales. He also considers if the lock-in effect is overstated and the relative value implication for new production discount mortgage-backed securities.
Repricing of rates while other asset classes focus strictly on soft landing
George Goncalves, MUFG Head of U.S. Macro Strategy, recaps the price action post the FOMC and the strong, more like wow, reading from the latest jobs report. George believes the rates market is normalizing to the idea that the Fed is “not done” and will likely be on hold for longer at higher rates, as well. That said, longer-term rates investors remain skeptical about the current state of the economy and the ability of the Fed to maintain rates elevated, or at a minimum, or are using long duration as a hedge to a potential financial accident and/or exogenous shock ahead.
Meanwhile, if the next inflation reading declines less than expected, or worse, hints that the services side inflation remains “sticky” that could result in further repricing ahead, where that would not only hit rates but broader financial assets as well, like credit and equities. Overall, we continue to view the recent bounce as a bear market rally.
Will the BoJ’s master architect of non-traditional monetary policy design a way out?
In today’s episode, MUFG Chief Japan Strategist Takahiro Sekido discusses recent media reports about BoJ leadership nominations and shares his outlook across markets in February. He also shares his views on spot Dollar/Yen, Yen rate, and Yen basis.
New BoJ leadership to represent change the shift from Abenomics to Kishida’s New Style of Capitalism
In today’s episode, MUFG Chief Japan Strategist Takahiro Sekido discusses what to watch during the fiscal year 2023 ordinary Diet session. He also shares his views on spot Dollar/Yen, Yen rate, and Yen basis.
U.S. Markets: 2023, a strong start, can it last?
George Goncalves, MUFG Head of U.S. Macro Strategy, argues that the latest price action, as positive and powerful to the upside that it has been, has skewed perception of the macro outlook. Granted, it’s likely that some positive factors – mostly the weather in Europe and contained energy, plus China reopening – have improved the outlook, these alone won’t be enough to overcome the cumulative effective of global central bank tightening and ongoing draining of liquidity via various forms of QT. In the end, it’s likely yet again another short-term bear market rally in risk assets.
Meanwhile, rates markets continue to defy the Fed and where policy rates will eventually stabilize at. These inconsistencies matter and could also drive Fed thinking. Chair Powell might remind investors that their policies work through tightening financial conditions. We expect a “hawkish” 25bps hike at the next meeting.
Foreign and Japanese investors cover shorts as arbitrage trading moves from cross-currency basis to the JGB yield curve
In today’s episode, MUFG Chief Japan Strategist Takahiro Sekido analyses investing flows and sentiment among Japanese and foreign investors based on the latest USTIC and JSDA data. He also shares his views on spot Dollar/Yen, Yen rate, and Yen basis.
The BoJ stays the course…for now
In today’s episode, MUFG Chief Japan Strategist Takahiro Sekido reviews the January BoJ policy meeting, shares his outlook for monetary policy going forward, and discusses cross-border securities investing flows during December. He also shares his views on spot Dollar/Yen, Yen rate, and Yen basis.
Are we in the winter of prepayment or are slow speeds just turnover?
In today’s episode, MUFG Head of Prepayment Modeling and Strategy, Glenn Schultz reviews December’s remittance data and addresses the question: are we in the winter of prepayment or are the slow speeds just turnover? He also discusses relative value across the specified pool and derivative markets.
2023 Macro2Markets Outlook Review
George Goncalves, MUFG Head of U.S. Macro Strategy still thinks it’s a macro-driven year ahead. The economic backdrop continues to worsen in the first half, and it’s possible that the recession hits sooner. The good news – U.S. inflation should continue to decline. By mid-year, the shift from inflation to growth concerns should result in a short-lived Federal Reserve (Fed) pause, and then easing by year-end. However, markets are already pricing to such an outcome on day one! The risk is that instead we get one last major sell-off at the start of 2023 as global rates rise (driven by other central banks – notably the BoJ and ECB along with supply concession). And we also think that risk markets (i.e. stocks) have yet to make their final low, too. While we wait to get clarity on the outlook for the economy, earnings, and risk assets, we make the case to dollar-cost average into bonds. We like L/T USTs/MBS on dips more so than credit, for now. For further information please also see the executive summary of our 2023 Macro2Markets Outlook titled Passing the Baton: A shift from inflation to growth concerns.
For more information,
Head of Rates Sales, Americas
New York, NY
Head of U.S. Macro Strategy
New York, NY
Chief Japan Strategist
Head of Agency Mortgage Prepayment Modeling and Strategy
The podcast content above is being provided for educational and informational purposes only. The information and comments are not the views or opinions of MUFG Union Bank, its subsidiaries or affiliates. Please consult your attorney, accountant or tax or financial advisor with regard to your particular situation.