Stability returns but too soon to say the coast is clear…:The MUFG Global Markets Podcast

George Goncalves, MUFG Head of U.S. Macro Strategy, is encouraged that stability has returned to the broader financial marketplace and the banks in particular, but he believes that it’s too soon to say the coast is clear. In his view, without a new negative catalyst, it’s understandable to see markets and policymakers return to their concerns over where we are in the inflation versus growth debate. And it’s true that vols in the broader asset classes have receded from the extreme levels seen in March. The concern is that after having witnessed some of the biggest moves in history, they can always come back and be disruptive once more. We think the markets have through the process of having less conviction on the macro outlook become a bit complacent as they wait for the next catalyst. However, we might need to wait until the conclusion of the upcoming Fed & ECB meetings in May before we get some clarity on where we truly are in the economic and liquidity cycle. Meanwhile, the debt ceiling concerns are growing and wait in the wings once the central bank meetings conclude. We remain cautious heading into summer.

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