JAPAN: LDP's Fukuda Calls For Unity Of Largest Faction After Abe's Death
Maintaining the cohesion of the largest faction within the ruling Liberal Democratic Party is critically important for Japanese politics, lawmaker and chair of LDP General Affairs Council Tatsuo Fukuda argued in a speech on Wednesday.
- The late former Prime Minister Shinzo Abe was leader of the Seiwa Policy Study Group, also known simply as the Abe faction. Nearly a hundred LDP lawmakers belong to the group, making it the largest faction within the LDP.
- After the fatal shooting of Shinzo Abe, the group decided to retain the name "Abe faction" and to leave the post of faction leader vacant for the time being. The faction has temporarily assumed a collective leadership framework, relying on a seven-member caretaker committee with two acting chairmen.
- Media reports suggested that there has been backlash against this mode of operation from some younger Diet members. It is worth noting that Fukuda leads a cross-faction group of younger lawmakers but also has clout within the Abe faction, being the grandson of its original founder and one of the most senior party officials.
- Fukuda refused to name any candidatures for Abe's successor as faction leader but suggested he was not planning to run. Whoever takes the helm of what is now the Abe faction will gain considerable influence on intra-party dynamics at a time when internal talks on the FY2023 budget are beginning to gain steam.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
AUDNZD: Higher, But Struggling Above 1.1000
AUD/NZD has edged into a slightly higher range, tracking close to the 1.1000 level. The pair is meeting selling interest above this level though, note the 50-day MA comes in at 1.1013.
- Today has seen slight A$ outperformance versus NZD, but both currencies are seeing tight ranges against the USD.
- The recent volatility in short term rates continues. The AU-NZ 2yr spread is back to -80bps, down from yesterday's highs of -70bps. This spread remains above recent lows though. 10yr spreads are also lower on the day, but by a smaller magnitude.
- Spreads were moving in favor of the AUD yesterday, so today’s shifts may be helping to cap gains in the AUD/NZD cross rate.
- A reminder that the data calendar swings into gear tomorrow, with AU retail sales on tap, followed by NZ business and consumer sentiment updates on Thursday and Friday respectively.
US TSYS: Light Richening Observed
A light bid has crept into the Tsy space after the marginal cheapening seen earlier, seeing cash Tsys run 1-2bp richer across the curve, with the belly leading the bid. TYU2 deals +0-03 at 116-29, operating just off best levels of the day
- The limited moves in Tsys come amidst a lack of notable macro headline flow, with an uptick in the major crude oil benchmarks (WTI and Brent operate a little below fresh one-week highs at writing) possibly capping the space after weakness in some of the major Asia-Pac tech equity benchmarks seemingly provided some support.
CNH: CNY Fixing 5-Day MA Error Term Turns Positive
The USD/CNY fixing printed at 6.6930, versus a market estimate of 6.6925.
- Today's result, a +5pip surprise in USD/CNY terms, follows yesterday's very close to expectations CNY fixing outcome.
- The rolling 5-day sum of the fixing error term has edged up to +20pips, highs back to late April on this metric. We were at -8pips yesterday. The longer term sums of the error term, 10, 20 day etc, still remain negative, albeit well away from recent lows.
- USD/CNH was tracking higher in earlier trade, getting up 6.7000, but we are now back to 6.6930/40, on the back of some softer USD sentiment emerging against the majors. The CNY fixing didn't shift market sentiment.
