Implications of Takaichi's LDP election victory for exchange rates and JGB yields
Key points
- Sanae Takaichi, proponent of "responsible, proactive fiscal stimulus," is elected LDP president and seeks to prioritize measures aimed at addressing rising prices
- By pursuing easy fiscal and monetary policy, Takaichi cabinet would encourage continued market expectations of rising stock prices and weaker yen
- Takaichi makes reference to Article 4 of Bank of Japan Act; Governor Ueda's cautious comments on US economy reduce likelihood of October rate hike
- JGB curve likely to twist-steepen initially, and special attention should be paid to super-long sector