Daily update
Daily update
- Japan's governing LDP looks to have won a two-thirds majority in the lower house, which means the upper house cannot stop legislation. The next focus is the budget and how a proposed consumption tax cut on food will be financed. Equities have reacted positively, bonds are likely to be somewhat cautious.
- The Epstein files are having political implications in some countries. An aide of UK PM Starmer has resigned over advising the appointment of Lord Mandelson (who was mentioned in the files). This may add a moderate political risk to UK assets. Other countries have had less of a political response, and thus less associated market risk.
- Bloomberg is reporting that China's government has urged domestic banks to limit exposure to US Treasuries, on prudential grounds. This does not include the official holdings, and China's banks are not major players in the US Treasury market. Nonetheless, the idea that international investors may be less inclined to buy US Treasuries in the future (without dumping existing holdings) is getting attention in markets.
- The data calendar is quiet. The NY Fed survey of US inflation expectations comes with the risk of political polarization. ECB Chief Economist Lane is scheduled to speak, but markets are secure in their expectation of a steady ECB policy.