Optimism in the September BoJ Tankan survey, large buying of EUR-denominated bonds, and rotation into USD spread product: The MUFG Global Markets Podcast

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.