Japan premiership race
Japanese Cabinet Secretary-General Yoshihide Suga announced on Wednesday that he would run for the ruling Liberal Democratic Party (LDP) leadership and premiership seats that Prime Minister Shinzo Abe vacated due to his failing health.
Suga, a longtime deputy of Abe said he entered the race to avoid a political vacuum during the epidemic. If Suga wins, he is expected to continue Abe’s fiscal and monetary stimulus policies.
“In this time of national crisis, we cannot allow a political vacuum,” Suga said at a press conference, referring to the economic devastation caused by Covid19 and the rising tensions with China in the Asia-Pacific.
Abe announced his decision to resign last week, citing his poor health. In the lower house of the parliament of the world’s third-largest economy, the LDP majority allows the party’s next leader to be re-elected the prime minister.
Suga’s main rivals in the internal party elections on September 14th are former defense minister Shigeru Ishiba and former foreign minister Fumio Kishida, but Suga’s position seems strong. The public broadcaster NHK reports that Suga received the support of 5 out of 7 factions of the LDP.
Financial markets also prefer Suga, assuming that Abe will continue the reflationary “Abenomics” strategy, which aims to revive the overdeveloped stagnant economy of the island country.
“Even though the economy is going through such a severe situation, we have been able to create more jobs, the yen stands at 105 (against the dollar) (Nikkei) stocks around 20,000,” Suga said.
Fed insists on continued support
Tom Barkin, President of the Richmond Federal Reserve told the Wall Street Journal in an interview published Wednesday that the US economy will need continued support as it faces a slowing recovery in the labor market.
According to WSJ, Barkin stated that the labor market recovery will be slower than expected, as the crisis caused by the coronavirus pandemic has been tougher than expected.
Referring to negative rates, Barkin, like other Fed officials, ruled out this possibility and said that rates below zero are not without cost.
DC disputes deepen
Democrats continue to disagree with the Republicans and the White House in negotiations for a new aid package, as Fed officials continue to insist on the importance of continued support for the economy which has suffered greatly from the Covid19 crisis.
White House chief of staff Mark Meadows said on Tuesday that Republicans in the Senate will vote in Senate next week on a bill offering an additional $500 billion in federal aid.
As Treasury Secretary Steven Mnuchin talked again with the Speaker of the House of Representatives, Democrat Nancy Pelosi, the negotiations remained inconclusive. In a joint statement, Pelosi and Senate Minority Leader Chuck Schumer again accused Republicans of indifference to the needs of American industries, workers, and their families.
Global markets
Stocks generally continued to rise on Wednesday, as economic data improved.
European stocks following their Asian counterparts advanced in early trading hours and ended four days of losses. London, Frankfurt, and Paris indices increased by an average of 1.4%.
MSCI’s largest Asia-Pacific stock index outside of Japan was up 0.3% earlier.
The chief driver of optimism is the outweighing bets that the world’s largest economies will recover from the damage caused by the coronavirus epidemic. Recent economic data has raised such expectations, boosted stocks, and helped the dollar rise from two-year lows.
Data on Tuesday showed that US manufacturing activity rose to its highest level since November 2018, with an increase in new orders in August.
