Global Markets Podcasts

With a sharp acceleration in the number of COVID-19 cases globally, and a raft of new restrictions for several major European economies, the outlook is darkening for Q4. Lee Hardman, currency analyst at MUFG, notes that despite the doom and gloom, there may be some light at the end of the tunnel. With positive Brexit talks suggesting a trade deal is nearing agreement between the UK and the EU, sterling seems to be performing well.

Elsewhere, the hotly debated US election is finally coming to a head. While Joe Biden is ahead in the polls, Donald Trump still has a narrow path to re-election. Lee believes this would be a surprise for markets, but it’s certainly within the realm of possibilities.

Investor sentiment towards emerging markets (EM) has improved thanks to a favourable global liquidity backdrop, supportive technical positioning and rebounding economies. However, EM policymakers are now facing difficult decisions on fiscal policy and monetary tightening as they navigate their recovery plans, with a view to prevent currencies from depreciating further and get growth back on track.  

Ehsan Khoman, Head of MENA Research and Strategy, believes that whilst the EM outlook is more buoyant going into 2021, this is not the time for markets to lower their guard, with a recovery likely to be uneven and highly de-synchronised, with headwinds that can stall the fragile state of affairs abound.

It’s a busy week in Japanese financial markets! An extraordinary Diet session was convened on October 26 and will last for 41 days through December 15. On October 22, committees comprised of both the ruling and opposition sides confirmed nine bills and one treaty to be addressed during this session. Prime Minister Yoshihide Suga, in his policy speech at the start of the session, proclaimed that his Cabinet is one that works for the people. Later this week, the BoJ will conclude its October policy meeting. Understanding the administration’s priorities as well as the next moves from the BoJ are key for any investor!

In this episode, MUFG’s Chief Japan Strategist, Takahiro Sekido, discusses Suga administration’s policy challenges, the October BoJ meeting, and gives a Yen Samurai primary market update. He also details implications, and his views for Dollar / Yen, Dollar / Yen cross-currency basis, and Yen rate.

The shocking acceleration of new COVID-19 cases in Europe are prompting countries such as Spain and Italy to introduce new measures such as curfews – but what does this mean for the economy?

In this episode, Derek Halpenny, Head of Research for Global Markets EMEA, explains why previous hopes for a ‘V’ shaped recovery are now being replaced with fears of a double dip recession and gives his market forecast ahead of the upcoming ECB meeting on Thursday.

Environmental, social and governance (ESG) considerations have been central in investor risk assessment in global oil markets for years. Over time, the focus has shifted between key themes including the environmental impact of oil production, health and safety standards, corporate integrity and climate change.

Ehsan Khoman, Head of MENA Research and Strategy, contextualises ESG’s current state of affairs in global oil markets. He believes that the near-term focus remains resolutely on maintaining safety records and defining company strategies in reducing carbon footprints whilst the medium-term challenge is adapting to the broader energy transition. Listen to Ehsan’s analysis.

MUFG's John Herrmann has revised his tracking estimate for 3Q-2020 real GDP growth to +35.5% q/q SAAR (previously, +39.7%). Although lower, the forecast is still higher than Bloomberg consensus of +32%. If John's forecasts prove accurate, they suggest that the level of real GDP may be fully recovered to its pre-pandemic level by July or August of 2021. That outcome would be 6 to 9 months sooner than the FOMC’s projections and the consensus estimates. Could such a rapid recovery to real GDP, to the unemployment rate, and to inflation influence investor sentiment and positioning to further steepen the 2s-30s Treasury yield curve towards 191bps over the medium-term? Fiscal stimulus remains the wild card but you might be surprised to learn that likely offers upside to these forecasts!?

In this episode, MUFG U.S. Rates Strategist, John Herrmann, takes listeners through the details of his tracking estimate for 3Q-2020 GDP. He discusses his more medium-term outlook and the role fiscal stimulus plays. He also explores the implications of those forecasts on his investment thesis, the 2s30s yield curve steepener.

The improvement in the diffusion index and large manufacturers’ expectations contained in the September Tankan survey was welcome news. That, however, comes at a time when the coronavirus pandemic may be re-accelerating globally, not to mention amid the uncertainty of the U.S. election and additional fiscal stimulus. Recent data shows an evolution in Japanese investment into foreign bonds while global affluent fund flows keep key currencies and interest rates in a narrow range. Risk aversion could result in Yen-strengthening stresses if the uncertainty ahead of the U.S. election grows. Investors should be watchful of growing JPY strengthening pressures against other key currencies.

In this episode, MUFG’s Chief Japan Strategist, Takahiro Sekido, discusses Japanese companies’ views of the economy as memorialized in the September BoJ Tankan survey, cross-border flows, and his views for Dollar / Yen, Dollar / Yen cross-currency basis, and Yen rate.

Safe haven currencies – USD, JPY and CHF – have outperformed in recent weeks as markets become more cautious about the global economic outlook, particularly in light of the sharp surge of COVID-19 cases in Europe, and the lack of optimism for agreement on a fiscal stimulus package ahead of the US election.

The pound is also one of the better performing currencies, despite more Brexit chaos following failed talks on a UK/EU trade agreement at last week's EU summit. Why is this? Lee Hardman, currency analyst at MUFG, explains on this week’s podcast.

Global air traffic is projected to decline by at least half in 2020 with most airlines predicting that business won’t return to pre-pandemic levels until 2023, at the earliest.

Ehsan Khoman, Head of MENA Research and Strategy, examines the how jet fuel demand is holding up and what this signals for global oil markets.  Listen to Ehsan’s analysis.

Brace yourselves. MUFG's John Herrmann just revised down his already low (U3) unemployment rate forecast to plunge to 6.25% by year-end 2020 (currently, 7.9%) and to 4.0% by year-end 2021 (our previous forecast, 4.6%). That only increases the gap between MUFG, the consensus, and "official" estimates like the FOMC and the IMF. Our updated forecasts are at least 150 bps lower than either the consensus estimate or the FOMC’s projections – not to mention that our forecasts are lower (by at least 40 bps) than every other estimate in the entire Bloomberg survey! As we are well aware, now, John Herrmann's growth expectations are similarly more optimistic. How will the FOMC and the yield curve react if MUFG's forecasts play out? Over the coming six to twelve months, as market and FOMC participants recalibrate their own expectations for the U.S. economy, might Treasury markets undergo a “mini” taper tantrum by late spring or early summer 2021?

In this episode, MUFG U.S. Rates Strategist, John Herrmann, reviews his revised unemployment rate forecast as well as discusses GDP and inflation forecasts. He also explores the implications of those forecasts on his investment thesis, the 2s-30s yield curve steepener.