FED: MNI 2025 Jackson Hole Preview
MNI's Markets Team has released a preview of this year's Jackson Hole symposium, including all the latest inter-meeting Fed commentary and our updated Hawk-Dove spectrum: Download Full Report Here
Fed policy communications will be a key focus in the coming days, starting with the minutes of the July FOMC meeting (1400ET Wednesday) which will be eyed for the degree of support on the Committee for a rate cut outside of the two dissenters (Bowman, Waller). The main event though is the annual Jackson Hole Economic Policy Symposium (Aug 21-23), with the key event being Chair Powell's speech on Friday (1000ET/1500UK).
- While Fed officials and multiple global central bank/policy figures will be in attendance, the focus as always will be the keynote speech by the Fed Chair, with Powell speaking at 1000ET Friday Aug 22 on the "Economic Outlook and Framework Review".
- Attention will of course mostly be on any nod Powell makes to a potential September Fed rate cut, a prospect which we discuss in this preview.
- MNI's Markets Team believes that in contrast to Jackson Hole 2024, Powell will avoid an overtly dovish nod at this meeting, given how split the Committee appears to be on the need to cut rates.
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JAPAN: PM Dealt Significant Blow In House Of Councillors Election Defeat
Prime Minister Shigeru Ishiba faces a period of significant political uncertainty following the poor performance of the governing coalition in the 20 July House of Councillors election. With 125 of the 248 Councillors' seats up for election, Ishiba's conservative Liberal Democratic Party (LDP) won 39, representing a loss of 14 from before the election. The LDP's coalition partner, the centrist social conservative Kometio, won eight seats, a loss of six. These losses mean that the combined seat total for LDP-Komeito falls to 122, below the 125 majority threshold.
- In terms of passing legislation, Ishiba will now be required to gain the backing of opposition parties or independents in the House of Councillors as well as the House of Representatives. This risks delays or significant alterations to legislation. The most likely parties to cooperate with the gov't are the fiscal populist Democratic Party for the People (DPFP) or the libertarian Japan Innovation Party (Ishin).
- Having lost the gov'ts majorities in both chambers, there is likely to be a groundswell of LDP opposition to Ishiba remaining in office, especially from the party's conservative wing. Ishiba has pledged to remain in office to deal with US tariff talks, and while there is no formal mechanism to remove an LDP leader from within, should enough lawmakers publicly back Ishiba's removal the PM's position could become untenable.
- The main gains came for the right-wing anti-immigration Sanseito (up from one to 15 seats) and the DPFP (up from 10 to 22).
Chart 1. House of Councillors Composition 2022 vs. 2025, Seats
Source: NHK, MNI. N.b. 125 Seats required for overall majority.
OPTIONS: Expiries for Jul22 NY cut 1000ET (Source DTCC)
- EUR/USD: $1.1500(E1.4bln), $1.1550-55($1.6bln), $1.1575-80(E700mln), $1.1620-25(E1.2bln), $1.1650(E797mln), $1.1700(E870mln), $1.1725-30(E958mln)
- USD/JPY: Y146.20-25($600mln), Y146.75($893mln), Y147.00($1.6bln)
- GBP/USD: $1.3250(Gbp525mln), $1.3385-00(Gbp1.2bln)
- AUD/USD: $0.6475-85(A$508mln), $0.6550(A$566mln)
- USD/CAD: C$1.3620-35($2.7bln), C$1.3710-20($845mln)
FED: US TSY 13W BILL AUCTION: HIGH 4.240%(ALLOT 25.24%)
- US TSY 13W BILL AUCTION: HIGH 4.240%(ALLOT 25.24%)
- US TSY 13W BILL AUCTION: DEALERS TAKE 31.23% OF COMPETITIVES
- US TSY 13W BILL AUCTION: DIRECTS TAKE 6.65% OF COMPETITIVES
- US TSY 13W BILL AUCTION: INDIRECTS TAKE 62.11% OF COMPETITIVES
- US TSY 13W BILL AUCTION: BID/CVR 2.98
