JAPAN: LDP's Tokyo Assembly Election Debacle Bodes Ill For Upper House Race
The ruling Liberal Democratic Party's (LDP's) dismal showing in yesterday's Tokyo Metropolitan Assembly Election is seen as a bad prognostic for the party ahead of the looming upper house election.
- The LDP secured a record-low number of 22 seats in the 127-member Tokyo legislature, falling behind Tomin First no Kail, a regional party founded by Governor Yuriko Koike, which won 32 seats. Three of these 22 assembly members were candidates who were not officially endorsed by the LDP due to their links to the political funding scandal.
- The results are a warning sign for the LDP ahead of the July 20 poll in which voters will elect half of the 248-member House of Councillors, the upper house of the National Diet, for a six-year term. Tokyo metropolitan elections are seen as bellwethers of national sentiment due to the region's sheer size and importance for the national economy.
- This comes after a series of measures taken by the LDP leadership to regain public confidence, including the announcement of a cash handout scheme and the appointment of Shinjiro Koizumi as Agriculture Minister. Furthermore, analysts have pointed to rhetorical attempts to decouple the Tokyo election and national political scandals.
- Mainichi wrote that 'in past election years when the upper house race trailed immediately after the Tokyo assembly poll, the election results of the latter were often linked to the former. This is because there are many independent voters in the capital, making the momentum of the administration of the time likely to be reflected in voting behaviour.'
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JGB TECHS: (M5) Rallies off Lows
- RES 3: 147.74 - High Jan 15 and bull trigger (cont)
- RES 2: 146.53 - High Aug 6
- RES 1: 141.48/142.95 - High May 2 / High Apr 7
- PRICE: 139.40 @ 15:42 GMT May 23
- SUP 1: 138.54 - Low May 22
- SUP 2: 136.57 - 1.382 proj of the Jan 28 - Feb 20 - Feb 26 bear leg
- SUP 3: 134.89 - 2.000 proj of the Jan 28 - Feb 20 - Feb 26 bear leg
JGBs have rallied off recent lows and for now, however a bearish theme remains intact following the reversal that started Apr 7. A continuation lower would signal scope for an extension towards 136.57, a Fibonacci projection. On the upside, a reversal higher would instead refocus attention on 142.95, the Apr 7 high. The first important resistance to watch is 141.48, the May 2 high. A break of this level would be viewed as an early bullish signal.
US FISCAL: Total Tariff Income Jumping In May As New Rates Hit
Treasury reported a record $16.5B in customs/excise taxes on May 22, reflecting the large increase in tariff rates that went into effect in April.
- Today's report is important because it represents the largest tariff collections of the month which are typically on a due date around the 22nd, when most corporate importers make their payments.
- Thursday's one-day collection is a record, and the month has already set a new record. Tariff revenues have totaled $22.3B so far in May, and are came in at $17.4B in April (after averaging $8.1B/month in 2024).
- For the fiscal year as a whole so far, customs duties have totaled just under $93B, per the Treasury Daily Statement.
US FISCAL: Extraordinary Measures Continue To Dissipate Alongside Treasury Cash
Treasury's latest estimate of the size of "extraordinary measures" available to use "in order to prevent the United States from defaulting on its obligations as Congress deliberate[s] on increasing the debt limit" is down to $67B on May 21 (of an available $299B), vs $82B a week earlier.
- The amount hit the 2nd lowest level since the debt limit impasse started, at $46B, on May 20 (the low was $34B on Feb 24).
- With $476B in cash in the Treasury General Account on May 21, that left the total resources available to Treasury at $543B, the least since April 14 - the day before the annual April 15 tax deadline.
- Treasury Sec Bessent warned Congress earlier this month that "there is a reasonable probability that the federal government's cash and extraordinary measures will be exhausted in August while Congress is scheduled to be in recess. Therefore, I respectfully urge Congress to increase or suspend the debt limit by mid-July".
