MUFG Asset Management (UK)

On Sunday, the Japanese Electorate delivered a major blow to the ruling LDP and Komeito coalition, stripping them of their lower house majority.     The result leaves PM, Shigeru Ishiba in a precarious position. In this snap update, our Chief Market Economist, Naoya Oshikubo looks at the various options open to the LDP and discusses the implications for the Yen and Japanese stock market. Please read our view in this article (click image or title) #MUFG #Japan #Elections #Economy #Markets #Equities   

With the expansion of NISA (Nippon Individual Savings Account), the number of accounts opened and the amount of purchases have significantly increased from January to June this year. Particularly, the number of accounts opened has risen among those in their 50s and 60s, with substantial new purchases in the Growth NISA investment quota. The expansion of NISA has prompted seniors to consider utilising their financial assets. Japanese domestic stocks accounted for 41% of the total purchase amount. The proliferation of smartphones and the enhanced services provided by securities companies are also seen as factors encouraging individual investment in securities. Although Japanese individuals are said to be risk-averse, they took risks in real estate to build assets until the 1980s. As Japan's economy heads towards inflation, it is expected that more individuals will allocate funds to securities to maintain their real purchasing power. #MUFG #Japan #Equities #Markets

Our monthly macro view has not greatly changed from last month and we remain focused on a number of key areas; the strength of the US economy versus expectations for rate cuts (see our September and October Thematic pieces on this topic), the slow pace of recovery in Europe and China’s longer term structural issues. With the US Election now only weeks away, we are mindful of the outcomes for each candidate although Harris is likely to offer greater certainty over a Trump win. Longer term, we are keeping a close eye on government debt levels and the fiscal response from governments.  Finally, we highlight our key duration, spread and currency views. #MUFG #markets #fixedincome #interestrates #economics

Why have we consistently argued that market expectations of substantial rate cuts are too optimistic? Last month we pondered why market expectations of rate cuts are more aligned with a recessionary environment and at odds with the situation in the real economy. This month, in the run up to the US elections, we expand on our previous post and highlight recent comments from Fed officials that suggest growing acceptance of a soft landing. #MUFG #markets #fixedincome #interestrates #economics

In our most recent Fixed Income Thematic report, Head of Fixed Income and Currency, Hiro Higuchi considers the gap in the market’s expected economy and the real economy. Expectations of multiple rate cuts by the middle of next year would suggest an economy in recession but numbers continue to suggest that the US economy remains in relatively good health. With this in mind, we consider the lessons we can learn from the interest rate cycles of the 90’s that bear many similarities to the situation of today. #MUFG #markets #fixedincome #interestrates #economics

In our September Fixed Income Monthly, Head of Investment, Gary Hutchings ponders the moderating inflationary environment and with weaker employment data, the emergence of downside risks. We also remain acutely aware of political risk with the US Elections now just six weeks away and elevated risk elsewhere including Europe, Russia, China and the Middle East. Government debt and ongoing deficits are in issue that may not manifest itself in the short term but one on which, as long term investors, we are keeping a close eye. While productivity remains weak, the economic backdrop is generally solid and allows central banks room to be patient in reducing rates, which we believe to be too high but again maintain our view that declines will be gradual. #MUFG #markets #fixedincome #interestrates #economics #macroeconomics

We are super excited about the Sustainability Rocks event hitting the stage on the 26 September at 100 Club. MUFG Asset Management's Senior Sustainability Adviser, Will Oulton brings the fun back to Sustainable Investment with a “Battle of the Bands” starring 4 top class acts. Hurry and get your tickets - there are only a small number left and the proceeds go to environmental and ecological charities. Check out the page for more info!  #sustainabilityrocks #sustainableinvestment

With the growing concentration of the Magnificent Seven mega caps, where can investors find value? Japanese Small Caps continue to offer attractive valuations and with ongoing industry reform, investors have the opportunity to benefit from improved profit growth. Find out why we believe this is an ideal time for investors to explore the benefits Japanese Small Caps can bring to their portfolios. #MUFG #Japan #Equities #Markets

The Sahm Rule, is a recession early warning indicator that compares the short term employment trend to the lowest level of the prior twelve months. As an indicator it has been a reliable predictor of recent US recessions.  Following recent US employment data, the threshold was breached with great interest from market commentators and suggestions that the US may be in the early stages of a recession.  We remain cautious - recent years have seen unprecedented low unemployment numbers and we ask if it is too early to apply the rule given that US unemployment is still below the estimated 4% full employment level. #MUFG #markets #fixedincome #interestrates #economics

Heightened JPY volatility continues over the summer and in this week's MUFG Global Markets FX Week ahead podcast, Lee Hardman, Senior Currency Analyst talks to Seiko Kataoka-Fisher, Head of Japanese Client FX Sales about what has been driving FX market over the past week after USD/JPY briefly fell back below the 142.00-level. Listen in full here: https://bit.ly/4dXwODp