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.
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.
The outlook for Japanese markets following the Bank of Japan’s surprise change to Yield Curve Control
In today’s episode, MUFG Chief Japan Strategist Takahiro Sekido dissects the December BoJ meeting, the monetary operations that followed, and what he expects going forward. He also shares his views on spot Dollar/Yen, Yen rate, and Yen basis.
Year-end Wrap-up and 2023 Prepayment Outlook
In today’s episode, MUFG Head of Prepayment Modeling and Strategy Glenn Schultz wraps up 2022 prepayment and reviews our major themes for the year and how they played out versus our expectations. Looking forward into 2023, Glenn discusses the outlook for prepayment, along with the PO value of the discount agency MBS sector and its place in investor portfolios.
December FOMC Preview: Easier FCI = Conundrum 2.0?
In this episode, MUFG Head of U.S. Macro Strategy George Goncalves walks us through what we collectively observed from the second weak inflation print in a row, and what to expect ahead on that front. George views the markets have this tendency to pull forward returns, and the latest price action is emblematic of such performance. Finally, George gives his base case on what to look for at the upcoming FOMC meeting. Bottom line, although with each subsequent FOMC meeting we are getting closer to the end of the hiking cycle, we do not expect chair Powell to signal as such.
What Japanese life insurance company sales of foreign bonds and increased currency hedging ratios mean for domestic Japanese bonds and cross-currency basis
In today’s episode, MUFG Chief Japan Strategist Takahiro Sekido reviews Japanese lifers first half fiscal year 2022 earnings and connects them to October securities flow data. He also shares his views on spot Dollar/Yen, Yen rate, and Yen basis.
The year in review for Yen rate and cross-currency basis and what to watch for in 2023
In today’s episode, MUFG Chief Japan Strategist Takahiro Sekido reviews 2022 and gives his outlook for 2023, including changes in JGB issuance. He also shares his views on spot Dollar/Yen, Yen rate, and Yen basis.
If Japanese investors sold a remarkable amount of U.S. Treasuries in September, why is cross-currency basis snapping tighter only now?
In today’s episode, MUFG Chief Japan Strategist Takahiro Sekido discusses the September USTIC and October JSDA, along with MoF investing flows data. He also shares his views on spot Dollar/Yen, Yen rate, and Yen basis.
U.S. Fixed Income – Time to dollar-cost-average in?
In today’s episode, MUFG Head of U.S. Macro Strategy George Goncalves discusses the recent price action around the CPI and PPI readings and puts that into context relative to the latest thinking on the Fed. George says we should take the Fed at face value until they decide to signal or officially offer forward guidance on policy objectives. That means that it’s still premature to suggest they are about to pause, and with USTs still sub where the Fed may still end up pushing up rates, George suggests that buying dips and potentially dollar-cost-averaging into fixed income is still the prudent course of action. Meanwhile, George does not think the bond market will take out all of the 2023 rate hikes – at least not between now and year-end – until the Fed gives more forward guidance.
Winter prepayment, issuance outlook, and the search for convexity
In today’s episode, MUFG Head of Prepayment Modeling and Strategy Glenn Schultz discusses the October remittance data and outlines our views with respect to winter seasonal turnover prepayment, 2023 issuance, and investors’ search for convexity in the agency MBS. He also discusses the use of machine learning to identify unique convexity profiles, and how investors may leverage machine learning to create excess risk adjusted returns in the agency MBS market.
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contact us.
John Cooke
Head of Rates Sales, Americas
New York, NY
1-212-405-7353
John.Cooke@mufgsecurities.com
George Goncalves
Head of U.S. Macro Strategy
New York, NY
1-212-405-6687
George.Goncalves@mufgsecurities.com
Takahiro Sekido
Chief Japan Strategist
Tokyo, Japan
1-81-3-6214-4150
Takahiro_Sekido@mufg.jp
Glenn Schultz
Head of Agency Mortgage Prepayment Modeling and Strategy
Chicago, IL
1-212-405-6521
Glenn.Schultz@mufgsecurities.com
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.