JAPAN: Kyodo News-Fmr. Minister Kono Offers Support To Koizumi In LDP Election
Sep-18 09:21
Kyodo News reports that former Minister for Digital Transformation Taro Kono has informed close associates that he does not intend to run for the presidency of the governing Liberal Democratic Party (LDP), and instead will offer his support to Agriculture, Forestry, and Fisheries Minister Shinjiro Koizumi. Kono, who has also served as Minister of Defence and Minister of Foreign Affairs, is viewed as an influential figure within the LDP, having come second behind Fumio Kishida in the 2021 LDP leadership race.
- Coming just days after another high-ranking endorsement in the form of Finance Minister Katsunobu Kato, Koizumi appears to have an initial advantage over his main opponent, Sanae Takaichi, in gaining the support of senior party figures. While the faction system of the LDP has been formally done away with, individuals who held senior roles in factions previously still wield significant influence over fellow lawmakers.
- Given that half of the votes in the election's first round go to party lawmakers (the other to grassroots party members), this backing can be crucial in determining the first round winner or who makes the (possible) run-off.
- Data from Polymarket shows Koizumi as the bettors' favourite to emerge as PM, with a 62% implied probability of victory compared to 34% for Takaichi.
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EGBS: Underperform Bunds and EGB Peers On BBG ICE Report
Aug-19 09:16
- EU-bonds underperform Bunds this morning, after Bloomberg reported overnight that ICE will not include EU-wide joint debt in its sovereign bond indices.
- Difficulty in securing index inclusion is not a new challenge for EU-bonds, with ICE rejecting a similar proposal last year.
- The Bloomberg report noted that “Even supporters of the change [i.e. to include in indices] commented that the EU is something neither/nor, something of a sub-sovereign or supra-sovereign agency rather than a typical sovereign entity”
- 10-year spreads are 2.5bps wider today at ~31.5bps, with other EGB spreads to Bunds up to 1bp tighter on the session.
- The combination of increased German issuance expectations and a pullback in EUR rates vol have contributed to broad-based EGB spread tightening to Bunds since the start of May. EU-bonds have participated in this dynamic, closely tracking similarly priced peers like RAGBs during the period.
SOFR OPTIONS: Notable Call Fly buyer
Aug-19 09:07
SFRU5 96.00/96.125/96.25c fly, bought for 0.75 in 18k total.
GILT AUCTION RESULTS: 1.125% Sep-35 linker
Aug-19 09:03
| 1.125% Sep-35 Linker | Previous | |
| Amount | GBP1.60bln | GBP1.70bln |
| Avg yield | 1.728% | 1.588% |
| Bid-to-cover | 3.10x | 3.35x |
| Avg price | 94.440 | 95.668 |
| Pre-auction mid | 94.413 | 95.639 |
| Previous date | 22-Jul-25 |
