JAPAN: Ishiba Maintains Intention To Remain PM As LDP Critics Threaten Recall
The governing Liberal Democratic Party (LDP) has concluded a two-hour meeting of lawmakers from both houses of the National Diet. The formal reason for the assembly was to assess the fallout from the 20 July House of Councillors election, in which the LDP-Komeito governing coalition lost its majority in the upper chamber. However, the meeting was also a chance for LDP lawmakers to voice their displeasure with PM Shigeru Ishiba, whose critics blame for the party's poor performance.
- Ishiba apologised for the seat losses, but stated that he intends to remain as party president and prime minister. Opponents have called for his resignation. On 7 August, a group of conservative LDP lawmakers led by Councillor Shigeharu Aoyama presented Chief Cabinet Secretary Yoshimasa Hayashi with a letter formally calling for the PM to step down.
- Under LDP rules, there is no 'vote of no confidence' measure. Instead, a 'recall provision' exists. An early leadership election is called if half of sitting LDP lawmakers and half of the LDP's prefectural organisations formally submit a request. At present it appears this threshold has not been met.
- The latest polling shows former Minister of State for Economic Security Sanae Takaichi leading with 26% support, ahead of Minister of Agriculture, Forestry and Fisheries Shinjiro Koizumi on 22%. Ishiba, who would be allowed to run for the leadership again, trailed with just 8% support.
- Takaichi is seen as an advocate of the loose fiscal and monetary policy stance of the late Shinzo Abe, while Koizumi is viewed as closer to former PM Fumio Kishida, who also pursued increased gov't spending on defence and investment in industry via deficit spending.
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MNI: mni: boe says financial stability risks remain elevated
- MNI: BOE SAYS FINANCIAL STABILITY RISKS REMAIN ELEVATED
- BOE: UK BANK SYSTEM REMAINS IN STRONG POSITION
UK: BOE: Financial Stability risks still elevated - FPC
Risks and uncertainty from geopolitical tensions and global fragmentation of trade remain elevated, the Bank of England's latest Financial Stability Report notes, with pressures on sovereign debt markets also still high.
Although some risks have crystalised, material uncertainty remains for the global macroeconomic outlook. With its large open financial sector, these risks are "particularly relevant to the UK," the FSR notes.
- However, UK consumer and corporate borrowers remain resilient and the banking system remains in a strong position to support households and businesses if we see a downturn worse than expected.
- Risks remain from continued high valuation of global asset prices
- Banks' CET 1 ratio was 14.4% in Q1, with liquidity cover at 153%
- The Financial Policy Committee maintained the countercyclical capital buffer (CCyB) rate at 2%, with relevant risk indicators not materially above long-term averages, with the FPC adding it stood ready to raise the CCyB if necessary.
- Despite a period of high volatility and transactional volumes, operational resilience in core government bond and repo markets was sustained through Q2.
- Gilt repo discussion paper to be published by BOE 'soon'
EQUITIES: Some notable upside momentum in Equities
- Some decent upside momentum in European Equities, no new headlines, and although we can't confirm stops, the price action would suggest so, some short are likely closing.
- Next resistance in VGU5 is at 5456.00, the June high.
- This latest leg is not Banking led, although SX7E is also at a new multi Year high.
- US Equities are now getting dragged higher.
