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US: Johnson Becomes Latest Rep. To Seek Speaker's Gavel After Day Of High Drama
Representative Mike Johnson (R-LA) will become the fourth Republican speaker-designate to seek the speaker's gavel in a vote likely to take place on the floor of the House of Representatives around 1200ET on 25 Oct. It remains unclear whether Johnson, a little known hardline social conservative who served on former President Donald Trump's impeachment defence team and has backed halting aid to Ukraine, will have the requisite support to win the requisite 217 votes to become speaker.
- In the late-night GOP caucus vote that put Johnson forward for the speaker vote, 43 Republicans voted for former Speaker Kevin McCarthy (R-CA) despite his name not appearing on the ballot.
- This comes after a day of high drama in the Capitol on 24 October that saw a win for Majority Whip Tom Emmer (R-MN) in the first set of votes, only for Trump to tank his candidacy. Trump cricicised Emmer in a social media post, calling him a “Globalist RINO”, short for “Republican in name only”, adding that his speakership would be a "tragic mistake".
- The continued inability of Republicans in the House to coalesce around a candidate poses risks in numerous areas, including foreign policy - where support packages for Ukraine, Israel and Taiwan are unable to be passed - and domestically given the looming partial gov't shutdown that kicks in from 0001 on 18 November if the requisite spending bills are not passed.
JAPAN: Nippon Life to Persist with Foreign Bonds, Despite Higher Hedging Costs
- Following yesterday's update from Japan Post, Nippon Life disclose their plans to boost domestic bonds holdings in the second half of this fiscal year, with purchases to include 30-year JGBs and yen-denominated foreign corporate bonds.
- Nippon Life's intentions are to maintain the current balance of hedged-foreign bond holdings despite high hedging costs but will invest money in attractive corporate bonds.
- Yesterday's Japan Post update disclosed their intention to shift more into JPY bond holdings, reducing their foreign debt holdings, citing elevated FX-hedging costs and their view of a firmer JPY in the second half of the fiscal year.
SCANDIS: Weaker Against a Stronger USD
Scandis start the day weaker (albeit off weakest levels at typing) as the USD and core FI yields rise during early European trade. NOK/SEK sits flat absent any domestic drivers, with a firming USD backdrop possibly a result of the Australian CPI surprise as well as Country Garden's USD bond default.
- EURSEK is around 0.2% higher on the day and almost 3% higher than the Sep 29 low, erasing much of the progress seen during the last week of September (which coincided with the Riksbank beginning their FX hedging operations). The Sep 25 high of 11.8655 is the next upside level eyed before 11.90 and 12.00 may present psychological resistance handles.
- EURNOK remains at the highest levels since early July and also sits 0.2% higher this morning.
- Swedish PPI earlier remained in deflation in Y/Y terms, but import prices continue to be pushed upwards by higher energy prices and the weak krona. The Riksbank's Jansson speaks on current monetary policy at 1230BST today.
