Japan Takaichi says it carefully if the current Govt-Boj agreement is the most suitable

• Government, Boj must be aligned with economic policy
• Will coordinate closely with the boj on this
• It is too early to be relieved of the Japanese economy
• The government must assume responsibility for the fiscal and monetary policy
• Never denied the importance of budgetary prudence
• Need rapid support for small and medium -sized weak enterprises in order to strengthen wages growth
• A policy option is to increase subsidies to local governments
• Will not exclude the reduction in the consumption tax

As mentioned earlier, Takaichi is a fervent supporter to mark a return from “Abenomics” and that means that it will have a more expansionary program in mind. In short, it possibly means locking the heads with the BOJ on the desire to increase rates while increasing expenses – which will be a net negative for Japanese obligations.

The probable reaction that we could get the open tomorrow could be a lower yen and perhaps a little cash register of the Japanese yield curve. The reaction of the JGB market could be more mixed to balance the prospects of BOJ as well as its budgetary pursuit. I would not expect a too strong reaction and all this is probably which should be disappeared throughout the day / week.

Returning to Boj, this will almost certainly push back any chance of increased rates in October. And one in December is also likely to be canceled. At least until political dust breaks down and Takaichi sets in, in particular in terms of management of its strategy in the treatment of the United States on trade.

On this front, she is a hardliner and a nationalist, so we will have to see how she wants to balance any approach in the treatment of Trump and his prices. But in the midst of the fractured nature of the LDP party, she might have to focus more on national issues rather than shaking the boat on international affairs for the moment.