The yen is already falling, following a surprising outcome in Japan's leadership election this weekend, which is expected to impact global financial markets. The dollar weakened on Sunday.
On Saturday, the governing Liberal Democratic Party tapped Sanae Takaichi selected a conservative lawmaker, paving the way for Japan to potentially have its first female prime minister.
Analysts anticipated a victory for the more budget-conscious Shinjiro Koizumi. However, the LDP's choice of Takaichi, an advocate for more relaxed fiscal and monetary approaches, might unsettle the bond market due to growing anticipation that Tokyo The government will borrow more funds as the central bank reconsiders its approach to interest rate increases.
Given Japan's existing debt load, which exceeds twice its GDP, the possibility of additional stimulus financed by borrowing might lead investors to seek higher returns. yields on extended maturity debt.
This, in turn, could lead to greater upward pressure on bond yields in other countries, including the United States, which depends significantly on Japanese investors as major purchasers of its Treasury securities. public debt.
The 10-year Treasury yield remained unchanged at 4.121%. The U.S. Dollar saw gains of 1.2% versus the yen and 0.2% against the euro.
Futures for the Dow Jones Industrial Average climbed 37 points, a 0.1% increase. S&P 500 futures also saw a 0.1% gain, with Nasdaq futures similarly up by 0.1%.
WTI crude climbed 0.9% to $61.44 a barrel, while Brent crude saw a near 1% increase, reaching $65.15. Gold saw a slight uptick of 0.1%, trading at $3,911.60 per ounce.
Takaichi is slated to officially assume the role of prime minister following a parliamentary vote this month, and her dealings with President Donald Trump will also be noteworthy. be examined closely.
She had previously proposed that Japan should reopen discussions on the trade agreement it finalized with the U.S. Following her LDP leadership victory on Saturday, Takaichi moderated her public statements this summer, indicating that a particular option is currently not being considered.
Financial markets are still contending with the persistent government shutdown, which shows no immediate prospect of resolution and will continue to impact crucial economic data concealed.
This coming week, the primary economic data to monitor will be the minutes from the Federal Reserve's most recent policy meeting, scheduled for release on Wednesday. The central bank operates independently due to its self-funding mechanism and therefore remains unaffected by any shutdown.
This coming week, multiple Federal Reserve officials are slated to deliver remarks, with Chairman Jerome Powell scheduled to speak on Thursday.
As the September jobs report from the Bureau of Labor Statistics was delayed due to the government shutdown, Wall Street is now looking to to switch between private sector gauges.
On Sunday, Mark Zandi, chief economist at Moody’s Analytics, issued a warning there was essentially no job growth in September, referencing information from Revelio Labs and ADP.
The core issue is that the absence of BLS jobs data significantly hinders our ability to gauge economic vitality and formulate effective policy. he stated in a series of posts on X. However, private entities are commendably bridging the deficit in employment statistics, at least for the present. This information indicates a struggling and deteriorating job market.