JAPAN: Takaichi Effectively Confirmed As Next PM After Ishin Ends Talks w/Oppo
Speaking after a second set of meetings in as many days with governing Liberal Democratic Party (LDP) President Sanae Takaichi, co-leader of the libertarian-federalist Japan Innovation Party (Ishin), Fumitake Fujita, said, "Both sides consider this to be a major step forward. We will now adjust the final wording and interpretation." He also said, "There are still some things that need to be sorted out."
- Crucially, the issue of the identity of the next Japanese PM looks to have been settled after Fujita said that Ishin will not continue discussions with opposition parties. Fujita added that an Ishin party executive had told the main opposition liberal Constitutional Democratic Party (CDP) and conservative populist Democratic Party for the People (DPFP) that Ishin lawmakers would find it difficult to vote for their leaders for PM.
- Fujita says that he believes it is "impossible to coalesce around an alternate [PM] candidate."
- Without Ishin's support, the chances of a non-LDP PM being elected are slim to none. The LDP and Ishin combined hold 231 seats, just short of the 233 majority threshold. There is effectively zero chance that all opposition lawmakers coalesce around a CDP or DPFP figure, meaning Takaichi looks set to become Japan's first female PM.
- The Ishin co-leader says that there was no discussion on potential cabinet posts for his party's lawmakers in any coalition. Ishin has laid down two further demands to the LDP for its support: a reduction in the number of lawmakers in the National Diet, and tighter restrictions on political funding.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
US TSY OPTIONS: TYV5 114.25 Calls Lifted
TYV5 114.25 calls paper paid 0-09 on ~3.2K.
GILTS: A Little Firmer To Start
The lack of upside surprise in this morning’s CPI data provides support to gilts through early trade.
- Yesterday’s high in futures is pierced before the rally stalls, contact last trades 91.55 vs. highs of 91.62.
- Bulls remain in technical control, initial resistance at the September 11 high (91.82), while support comes in at the September 2 low (90.65).
- Yields ~1bp lower across the curve.
- Spread to Bunds little changed at ~194bp.
- GBP STIRs roughly in line with pre-gilt open levels detailed earlier, 8.5bp of BoE cuts priced through year-end.
- The outcome for this week’s MPC meeting can be boiled down to two discrete topics: the vote surrounding the pace of APF reduction and any updates on communications and the vote surrounding Bank Rate. The biggest uncertainty and market reaction is expected around the former, with much less focus being placed upon the latter - but neither aspect should be ignored.
- Our full preview of that event is here.
- Local headlines have pointed to a markdown in the OBR’s productivity forecasts and a negative outcome when it comes to steel tariffs imposed by the U.S.
EQUITIES: Updated Roll Pace
EQUITY ROLL PACE: December has been the front Month for US already this Week, we'll look for Europe to also switch into Tomorrow.
As expected some Desks have favoured to Roll, Close positions ahead of the Fed.
US:
- ESA: 74%.
- NQA: 59% (below pace).
- DOW: 73%.
EU (As of Yesterday):
- VGA: 67%.
- Banks: 70%.
- Stoxx600: 73%.
- Dax: 60%.
- FTSE: 67%.
