The MUFG Global Markets Podcast

Lee Hardman, Senior Currency Analyst, and Jack Greenslade from the Global Customer Marketing Group, discuss the latest central bank policy updates in Europe. Will the policy updates alter European currency performance ahead of the upcoming French elections? 

Notwithstanding the pivot to the right in France, Italy and Germany during parliamentary elections earlier this month, the EU Green Deal – the continent’s flagship framework in making Europe climate neutral by 2050, is alive and well (in aggregate). However, Ehsan Khoman, Head of Research – Commodities, ESG and Emerging Markets (EMEA), believes that a new narrative and mindset shift is now needed to successfully implement the set of policy initiatives, as the shift to the right may witness an integration of the green agenda with other major economic and social considerations, such as industrial policy, competitiveness and affordability considerations. Whilst this could signal a more restrained approach to greening the European continent, it can equally help mitigate political resistance by encouraging more thoughtful public policy.  

This week George Goncalves, MUFG Head of U.S. Macro Strategy, quickly reviews that first two weeks of June, which were macro event intense with various central bank meetings and inflation reports among other things. The more hawkish Fed event led to the strategy team pushing back their first Fed cut view to September from July. George believes the market becomes more technical-driven and less macro-focused into quarter-end.  

Heightened political uncertainty in France has emerged as important driver of FX market performance over the past week. Lee Hardman, Senior Currency Analyst talks to Michael Owen, Head of Global Client Desk EMEA, about how election risks in France and the UK are impacting the outlook for the FX market alongside the latest policy updates from the BoJ, BoE and Fed.

Last weekend’s EU elections marked the end of the bloc’s greenest parliament ever with the overall “shift to the right”, though centrist parties still retained the majority. Whilst the post 2030 climate agenda could be weakened in ambition, Ehsan Khoman, Head of Research – Commodities, ESG and Emerging Markets (EMEA), believes that there is unlikely to be any major overhaul on sustainability, but rather there may be fresh emphasis on integrating economic attractiveness and sovereignty components into the existing European Green Deal, with a focus on regulatory simplification. Disclaimer: www.mufgresearch.com (PDF)

This week George Goncalves, MUFG Head of U.S. Macro Strategy, gets us caught up on what has been happening in global macro and markets, with a focus on recapping the May NFP jobs report, which he believes wasn’t as strong as the headlines suggested, and that it is another report that demonstrates there are clearly macro divergences forming in various parts of the labor force. George also provides his thoughts on what to look out for in the CPI report, where we are waiting to see if the shelter costs ever come down enough to pull inflation readings lower. Meanwhile, the CPI report takes place ahead of the June FOMC meeting where we are keenly focused on the dots (interest rate estimates) and the terminal level estimates for the core PCE inflation reading published in the summary of economic projections (SEP) by the Fed. In addition, will Chair Powell sound dovish (and echo some of the same concerns that the strategy team has around the true health of the jobs market) or will Chair Powell be hawkish. Chair Powell has threaded the needle lately with his communications, but if markets deem that his message is hawkish, after a hawkish release of the dots, a major risk-off would be in store.

With the rupiah falling to a four-year low, it's perhaps timely for us to re-assess our short-term outlook for the currency. We also delve into how the long-term appeal of the rupiah has improved, led by EV. 

The US jobs data was much stronger than expected today and Derek Halpenny, Head of Research Global Markets EMEA & International Securities, speaks to Shan Husain, Institutional FX Sales about the implications of the data for the dollar and ahead of the FOMC meeting next week. Derek also discusses the possibility of the BoJ altering its policy on JGB purchases at the meeting next Friday.    Disclaimer: www.mufgresearch.com (PDF)

The International Energy Agency (IEA) released its 2024 iteration of its flagship World Energy Investment (WEI) report this week, with a wealth of insights into the latest investment trends across the global energy landscape that aims to support corporates and investors in assessing risks and opportunities across the energy ecosystem. In this week’s podcast, Ehsan Khoman, Head of Research – Commodities, ESG and Emerging Markets (EMEA), evaluates the key findings of the WEI 2024 report with specific reference to transition finance tools that are emerging as a promising means to drive more capital into hard-to-abate sectors. Disclaimer: www.mufgresearch.com (PDF)

Lee Hardman, Senior Currency Analyst, and Seiko Kataoka-Fisher, Vice President from Japanese Customer Sales for EMEA in London, discuss what to expect from next week’s BoC and ECB policy meetings. Will the FX market impact from the policy updates be overshadowed by next week’s NFP report? Disclaimer: www.mufgresearch.com (PDF)

The power grid – arguably the backbone of the global economy – is the backbone of the energy transition but also its main bottleneck. We are at a critical convergence of the demand ramp-up of an increasingly electrified economy – driven by the rise of electric vehicles, datacentres and artificial intelligence (AI) – and an aging power grid that requires significant upgrading (particularly in a world of more renewable but intermittent energy). In this week’s podcast, Ehsan Khoman, Head of Research – Commodities, ESG and Emerging Markets (EMEA), delves into the obstacles to grid modernisation and explores potential hardware and software solutions, including the greater use of long duration energy storage, wider applications of demand responses as well as the adoption of automation and AI. Disclaimer: www.mufgresearch.com (PDF)

Michael Wan, Senior Currency Analyst with Global Markets Research Asia, discuss three key things to watch in India - 1) the upcoming General Elections, 2) RBI policy on 7 June, and 3) the impact of larger than expected dividends from RBI

This week Derek Halpenny, Head of Research Global Markets EMEA and International Securities talks to Abdul-Ahad Lockhart, currency analyst, about safe-havens in the FX market. What determines safe-haven currencies and what other factors need to be considered in anticipating currency performance during a bout of risk-off? Derek argues that while the US dollar is the obvious safe-haven choice in the FX markets there are scenarios when that might not be the case and other currencies could take precedence. Disclaimer: www.mufgresearch.com (PDF)

The European Securities and Markets Authority (ESMA) has released its long-awaited final report on the guidelines on funds’ names using ESG or sustainability-related terms, which are set to significantly impact the ESG fund market. In this week’s podcast, Ehsan Khoman, Head of Research – Commodities, ESG and Emerging Markets (EMEA), delves into the key elements of ESMA’s final report, contextualising their impact on corporates and offers perspective on what may be next for the European sustainable finance market. Disclaimer: www.mufgresearch.com (PDF)

Lee Hardman, Senior Currency Analyst, and Seiko Kataoka-Fisher, Vice President from Japanese Customer Sales for EMEA in London, discuss why the USD has been weakening in recent weeks and whether it is likely to extend further. Will Biden’s decision to impose fresh tariffs on imports from China derail strengthening growth momentum outside of the US?  Disclaimer: www.mufgresearch.com (PDF)

With six months to go, the outcome of the US presidential elections – along with control of the Senate – is likely to have a profound impact across environmental, social and governance (ESG) issues. Ehsan Khoman, Head of Research – Commodities, ESG and Emerging Markets (EMEA), assesses the key policies that could change under a new administration and the reverberations that may transpire within the ESG ecosystem. Disclaimer: www.mufgresearch.com (PDF)

This week George Goncalves, MUFG Head of U.S. Macro Strategy, recaps what he has learned from the various trips he has been on while visiting investors and how it compares to our house view. He also goes over his short-term views on inflation ahead of the all-important CPI report. In George’s view, just like the last NFP report captured some of the concerns that have been forming for quarters now (and something we have been flagging), what if shelter cost declines show up now and actually start driving CPI lower, just in time for a Fed that needs greater confidence before thinking about when to ease rates ahead.

From the best performing G10 currency last week, the yen has turned and is the worst performer this week. Derek Halpenny, Head of Research Global Markets EMEA & International Securities talks to Simon Mayes, Head of UK Ireland and Switzerland FX Corporate Sales about the shift in tone from BoJ Governor Ueda who turned a lot more hawkish with concerns increasing over yen weakness. Derek also discusses the potential for the BoE cutting rates in June following the MPC meeting this week and the stronger GDP data today.

Lee Hardman, Senior Currency Analyst, and Andrea Hayward, Vice President of the Japanese Client Sales Group for EMEA in London, discuss the fallout from a volatile week for USD/JPY. What have been the main drivers behind the sharp correction lower for USD/JPY?   Disclaimer: www.mufgresearch.com (PDF)

EU parliamentary elections in June are fast approaching and the decibels of debate surrounding the Green Deal legislation are rising. Certain investors have suggested that a shift in political attention away from the Green Deal and that recent pushback and watering down of some regulation is negative for climate action in Europe. Ehsan Khoman, Head of Research – Commodities, ESG and Emerging Markets (EMEA), discusses this shift in focus and whether this is a reflection of a broader ESG pushback, or whether a shift in narrative mindset is warranted to ensure a successful implementation post June’s EU parliamentary elections. Disclaimer: www.mufgresearch.com (PDF)