EMISSIONS: T&E Says 2040 Target, EU ETS2 Delay Undermine Climate Leadership

TD Securities now expect the BOJ to hike rates in December rather than October, following Sanae Takaichi’s victory in the LDP leadership election.

• They believe Honda’s interview yesterday “sends a clear signal that Takaichi's administration is not against further hikes but is asking for some time to formulate and implement their policies”. TDS expect Governor Ueda “to send a hawkish signal in October and lay the groundwork for a December hike to avoid surprising the markets”.
• TDS note that Takaichi’s “nomination of Suzuki and Aso to top's LDP positions […] should help alleviate concerns that she will embark on a fiscal spending splurge”.
• We highlighted yesterday that Takaichi also moderated her firmer views on the BoJ during the campaign trail, and stressed the responsible approach to spending her government would adopt.
• Despite these more moderate signals, USDJPY is still biased higher this morning, currently up 0.3% at 150.78 and narrowing the gap to key medium-term resistance at 150.92 (Aug 1 high). A break of this hurdle would confirm a resumption of the bull leg that started Apr 22, exposing the March 28 high at 151.21.

Former Prime Minister Edouard Philippe has publicly called for presidential elections to be brought forward from mid-2027 to try and break the current political crisis that is set to claim France's third prime minister in less than a year. Philippe's intervention is a notable one. Opposition figures have frequently called for President Emmanuel Macron to stand down and call a snap election. However, Philippe not only hails from the centrist bloc of parties that supports the gov't, but also served as Macron's first prime minister on coming to office in 2017. 

• Speaking to RTL, Philippe said Macron should "appoint a government that will adopt a budget and then [call] an early presidential election. [...] We still don't have a budget, time is running out [...] the way out of the crisis rests with Emmanuel Macron and he must live up to his mandate. "
• Philippe leads the centre-right Horizons party and has announced his intention to run in the next presidential election. Early opinion polling shows that of the potential candidates from the centrist bloc, Philippe has the best chance of making a run-off against the far-right National Rally candidates.
• Another former Macron PM, Gabriel Attal, said in a TV interview on 6 Oct that he "no longer understands the decisions" of the head of state. Says Macron's decision-making indicates someone unwilling to share power.
• Data from Polymarket shows political bettors assigning a 23% implied probability that Macron is out of office by end-June 2026, up from 11% on 5 Oct.