JAPAN: Post-LDP Election, Focus Will Turn To Parliamentary Support
By the evening of Saturday, 4 October, the governing conservative Liberal Democratic Party (LDP) will have a new president. The winner of the election will also become prime minister-designate. This comes ahead of a vote in the National Diet to confirm the new LDP president as outgoing PM Shigeru Ishiba's successor, expected on 15 October. However, in the intervening 11 days, the new LDP leader will have to gain the backing of at least one opposition party in order to secure a majority in both chambers of parliament.
- The libertarian federalist Japan Innovation Party (Ishin) and the conservative populist Democratic Party for the People (DPFP) are seen as the two parties most likely to be able to work with the LDP (and their perennial coalition partners, the social conservative centrist Komeito). The backing/abstention of just one of these parties would be enough to confirm the incoming LDP leader as PM.
- There has been speculation that frontrunner, Agriculture, Forestry and Fisheries Minister Shinjiro Koizumi, could seek to appoint LDP election strategy committee chairman Seiji Kihara as his Chief Cabinet Secretary if elected. This risks losing the support of Ishin, with Shueisha reporting that, according to Ishin sources, "Kihara is the only one that's out. If that liar becomes Chief Cabinet Secretary and Chairman of the Policy Research Council, how can we form a coalition?"
- Under any LDP leader, negotiations with Ishin would also prove difficult in determining which party would run candidates in each prefectural ward, especially the city of Osaka, where Ishin is particularly strong.
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BOE: Bailey: Don't focus too much on 30-year gilt yields
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GBP STIRS & the front end of the gilt curve are unreactive to the initial comments at the BoE TSC hearing.
- Deputy Governor Lombardelli’s hawkish dissent was centred on her outlook for inflation, while both Lombardelli and fellow hawkish dissenter Greene have given some meaningful weighting to food inflation.
- Lombardelli’s comments surrounding neutral rate levels also screen a little hawkish.
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- SONIA futures flat to +3.0.
- UK yields 1.5-4.0bp lower on the day, at/just off session lows.
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