NEW
YORK, Jan. 2, 2024 /PRNewswire/ -- Mitsubishi
UFJ Financial Group's (MUFG's) U.S. Macro Strategy team released
its 2024 outlook report titled "Getting Back in Sync?" providing a
forward-looking perspective on the U.S. fixed income markets and
the macroeconomic factors impacting the U.S. economy in the next 12
months.
"The U.S. economy has dodged exogenous shocks relatively well so
far, but in our view, many segments in the economy are still out of
sync," says George Goncalves,
Head of U.S. Macro Strategy.
In the report, Goncalves and team look at the various economic
scenarios for 2024, writing that the best case is a mild U.S.
recession – a bumpy landing – for next year.
"Although still our base-case, we have been taking down our
recession odds post the height of the regional banking crisis,"
Goncalves says. "Lending has stalled, but we did not have a
fire-sale event nor a credit crunch. Overall, it is possible to
dodge a recession if the Federal Reserve and fiscal agents are to
ease even further and if bank lending returns. Yet, that seems
unlikely for now, so we see more of a mild recession before
sustained growth."
Key takeaways for fixed income markets
- In rates, our team believes that investors need to triangulate
when interest rate cuts begin and how far the Fed will drop rates
versus negative carry considerations. MUFG believes the Fed needs
to re-steepen the curve. Thus, the team's favorite ideas revolve
around finding the most optimal curve trades.
- In mortgages, MUFG remains constructive on the MBS-basis.
However, our team is mindful of the risk that prepays pick up. MBS
should outperform credit.
- In investment grade, MUFG believes the product will lag in a
rates rally, which could serve to widen spreads at times. With
supply mattering once more.
- In high yield (HY) credit, it will come down to U.S. economic
health and whether liquidity will still flow into risk assets.
Idiosyncratic risks will also play a role in bond selection. From a
spread basis, our team is cautious HY at current levels.
For the full 2024 outlook report, please reach out to the MUFG
U.S. Macro Strategy team at usmacrostrategy@mufgsecurities.com.
Press contact:
Oksana Poltavets
opoltavets@us.mufg.jp
T: +1 (646) 767-1326
About MUFG and MUFG Americas
Mitsubishi UFJ Financial Group, Inc. (MUFG) is one of the
world's leading financial groups. Headquartered in Tokyo and with over 360 years of history, MUFG
has a global network with approximately 2,000 locations in more
than 40 countries. MUFG has nearly 120,000 employees and offers
services including commercial banking, trust banking, securities,
credit cards, consumer finance, asset management, and leasing. The
Group aims to "be the world's most trusted financial group" through
close collaboration among our operating companies and flexibly
respond to all the financial needs of our customers, serving
society, and fostering shared and sustainable growth for a better
world. MUFG's shares trade on the Tokyo, Nagoya, and New
York stock exchanges.
MUFG's Americas operations, including its offices in the U.S.,
Latin America, and Canada, are primarily organized under MUFG
Bank, Ltd. and subsidiaries, and are focused on Global Corporate
and Investment Banking, Japanese Corporate Banking, and Global
Markets. MUFG is one of the largest foreign banking organizations
in the Americas. For locations, banking capabilities and services,
career opportunities, and more, visit www.mufgamericas.com.
View original content to download
multimedia:https://www.prnewswire.com/news-releases/mufg-issues-us-macro-strategy-2024-outlook-report--getting-back-in-sync-302024556.html
SOURCE MUFG Bank, Ltd.