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JAPAN: LDP Candidates Support New Parties In Coalition, No Signal Of Which Ones
Speaking at a joint press conference earlier today, all five candidates for the presidency of the governing Liberal Democratic Party (LDP) voiced their support for the prospect of expanding the governing coalition beyond the LDP and its long-term partner, the centrist social-conservative Komeito party. The two leading candidates, former Minister of State for Economic Security Sanae Takaichi and Minister for Agriculture, Forestry and Fisheries Shinjiro Koizumi, offered different views on the timeframe of expanding the governing coalition.
- Takaichi advocated a swift inclusion of new parties should she win the presidency, while Koizumi said it is "not about setting a deadline". The LDP is short of a majority in both chambers of the National Diet following lower house elections in Oct 2024 and the upper house in July.
- The decision on which party/parties to invite into gov't would inevitably cause intra-LDP tensions. Moderates would favour the centre-right Democratic Party for the People or libertarian regionalist Ishin, while those on the right may advocate brining the far-right nationalist Sanseito, one of the major winners of the July election, into gov't in order to try and halt its progress.
- Political bettors continue to view Koizumi as favourite to succeed PM Shigeru Ishiba, with data from Polymarket showing the 44-year-old with a 75% implied probability of winning, compared to 22% for Takaichi (64). The latest polling from Sankei/FNN, Asahi Shimbun, and Mainichi showed Takaichi favoured by all respondents, but Koizumi ahead among LDP supporters. In the first round of the contest (on 4 Oct), half of the overall votes go to grassroots party members and the other to LDP lawmakers.
Chart 1. Political Betting Market Implied Probability of becoming next Japanese PM, %
Source: Polymarket
EGB SYNDICATION: DDA: 30-year 3.50% Jan-56 DSL: Cut off spread
- Cut off spread 2.90% Aug-54 Bund + 20bps
- Prelim initial spread guidance yesterday was +18.5 to 22.5bps then revised to 19.5 to 22.5bps as books opened then 19.5 to 21.0bps. Final guidance was + 20 to 21bps
- Size: E4.0-5.0bln will be on offer (MNI assume takeup at the top of the target range)
- Final book: E32.739bln
- Maturity: 15 January 2056
- ISIN: NL0015002P70
- Books closed, pricing today
EUR: EURGBP is testing the August high Post UK Data
- Given the broader small pressure on the Pound since the UK PMIs, it is worth keeping an eye on the EURGBP which is now testing the August high at 0.87438.
- Market Participants will be keeping a close eye at the July spike up to 0.8769, which closely matched with the November 2023 high, and also some of the best level seen since May 2023.
(Chart Source: MNI/Bloomberg Finance LP).
