JAPAN: PM Kishida Plans To Introduce Reforms Which Will Change Regional Security

Jun-10 13:09

Japanese Prime Minister Fumio Kishida has used his keynote speech at the Shangri La Security Dialogue in Singapore today to announce plans of a substantial increase in Japan's military budget.

  • Significantly, Kishida did not rule out developing counterstrike capabilities, a move which would alter the security architecture of East Asia and fundamentally change Japan's post-war approach to defence.
  • Security Expert Lionel Fatton says: "Pillar 1: Kishida said Japan to devise an IndoPacific Plan for Peace to strengthen Free/Open region. Emphasis on Pacific Islands obvious in his speech at the Shangri La Dialogue. Pillar 2: to bolster deterrence/defense capabilities. "Will not rule out any option," including counterstrike."
  • Robert Ward notes that although the military announcement will be picked up by wires the focus on economic security is "surely a first for a Shangri La to have a keynote with a focus on economic security. A focus for Kishida's administration, a sign of the times."
  • Kishida also plans to attend the NATO leaders summit in Madrid later this month. Analysts say this move is further evidence of Japan "shedding constitutional constraints" and reforming its military.

Historical bullets

STIR: Effective Fed Funds Rate

May-11 13:05

FRBNY EFFR for prior session:

  • Daily Effective Fed Funds Rate: 0.83% volume: $72B
  • Daily Overnight Bank Funding Rate: 0.82% volume: $253B

CROSS ASSET: BITCOIN approaching big support

May-11 13:03

XBT is approaching big support at 28,824.32.

Chart source: MNI/Bloomberg

US TSYS: Market Roundup: Post-Data Bear Flattening

May-11 12:59

Rates still weaker after higher than expected April inflation data, reversals pauses with some two-way last few minutes with fast$ buying 10s. Heavy front end selling (2YY taps 2.7276% high vs. 2.6124% late Tue) on prospect of renewed hawkishness from the Fed to combat inflation.

  • Yield curve volatility at the moment, flatter but off lows: 2s10s -4.544 at 32.892 vs. 28.372 low; 5s30s holding off inversion for the moment at 5.4684 (-1.750) vs. 2.519 low.
  • US 10Y technicals: primary downtrend remains intact and the recovery from Monday’s low is considered corrective. Recent fresh cycle lows confirmed a resumption of the downtrend and an extension of the price sequence of lower lows and lower highs.
  • Furthermore, recent corrections have tended to be shallow and this highlights bearish sentiment. June 10Y futures trading 118-07 (-18) with key support at 117-08+ (Low May 9 and the bear trigger). Below that, attention on 116-28, a Fibonacci projection. Key resistance is 120-18+, Apr 27 high.
  • Cross-assets: WTI Crude Oil (front-month) holding gains +$3.10 at $102.86; while support in Gold evaporates, currently at $1839.00.