In Japan’s July 2025 Upper House elections, the ruling Liberal Democratic Party and its coalition partner Komeito suffered a major defeat, while conservative parties such as Sanseito and the Conservative Party of Japan made significant gains.

TOKYO (Reuters) -Japan’s election outcome may put the central bank in a double bind as prospects of big spending could keep inflation elevated while potentially prolonged political paralysis and a global trade war provide compelling reasons to go slow on rate hikes. Lingering political uncertainty may also weaken the yen and push up import costs, some analysts say, adding to mounting price pressures that conflict with the Bank of Japan’s current approach to stand pat until the political storm calms. The rising cost of living was among factors that led to the bruising defeat of Prime Minister Shigeru Ishiba’s ruling coalition in upper house elections on Sunday. With inflation holding above the BOJ’s 2% target for over three years now, some BOJ board members have already warned of growing price pressure. Junko Koeda recently argued for the need to monitor second-round effects from rising rice costs. Another board member, Hajime Takata, said this month the BOJ must resume rate hikes after a temporary pause as Japan was on the cusp of achieving the bank’s 2% target. "If upward inflation risks heighten, the BOJ may need to act decisively as a guardian of price stability," its hawkish policymaker Naoki Tamura said late last month. Now a minority in both chambers of parliament, Ishiba’s ruling camp must compromise with opposition parties, which have called for tax cuts and bigger spending, to pass legislation. In a nod to such calls, Ishiba said on Monday he would stay on as prime minister and work with other parties on measures to cushion the blow to households from rising inflation. While a cut to the consumption tax would leave a huge hole in Japan’s worsening finances, doing so would require passing legislation through parliament and take time. More likely would be for Japan to compile an extra budget in autumn to fund payouts and tax breaks. The size could exceed last year’s 14-trillion-yen ($95 billion) package given heightening opposition demands for bolder steps, analysts say. "A supplemental budget this fall to help firms cope with U.S. tariffs was expected even before the vote. Now, opposition parties may demand a larger package," said David Boling, a director at consulting firm Eurasia Group. YEN MOVES KEY To be sure, Japan’s economy may need the fiscal boost after shrinking in the first quarter and seen taking a hit from U.S. tariffs that are already hurting its mainstay automobile sector. But market worries over Japan’s huge debt and political instability could weaken the yen, and cast doubt on the BOJ’s view cost-push pressure will ease later this year, analysts say. "With Ishiba signaling his resolve to stay on as premier, markets are now in a wait-and-see mood. But that doesn’t mean the chance of yen declines has disappeared, as the election definitely weakened administration’s standings," said Tsuyoshi Ueno, an economist at NLI Research Institute. Unlike other major economies, Japan’s inflation-adjusted real interest rates remain deeply negative due to the slow pace at which the BOJ rolled back a decade-long, massive stimulus. After raising short-term interest rates to 0.5% in January, Governor Kazuo Ueda has signaled a pause in rate hikes until there is more clarity on the economic impact of U.S. tariffs. Given the risk from U.S. tariffs, many analysts now expect no rate hike for the rest of this year. But staff BOJ estimates suggest its policy rate must rise at least to 1% to reach levels that neither stimulates nor cools growth. In the end, a renewed yen decline could be the next decisive nudge towards further rate hikes, some analysts say. Although the BOJ is guaranteed by law independence from government interference, it has historically been sensitive to political developments. Its massive stimulus in 2013 was deployed after intense pressure from then premier Shinzo Abe to reverse a strong yen and beat deflation. The BOJ’s exit from ultra-loose policy last year came after a flurry of calls from politicians to help stem sharp yen falls that were pushing up import costs. "For the BOJ, the biggest concern is how the election could change the government’s focus on economic policy, and how markets could react," said a source familiar with its thinking. Veteran BOJ watcher Mari Iwashita sees the chance of a rate hike in October if the yen, now around 147 to the dollar, falls below 150 and puts upward pressure on prices. ($1 = 147.4300 yen)

Japan's ruling coalition lost its upper house majority in Sunday's election. PM Shigeru Ishiba will...

Shigeru Ishiba’s future as Japan’s prime minister hangs in the balance after his political bloc, which has held power for 70 years, lost its majority in both houses of parliament for the first time.#Japan #Ishiba #Japanelection #election #LiberalDemocraticParty

Investing.com - U.S. stock futures tick up ahead of a week filled with key earnings from S&P 500 companies. Verizon (NYSE:VZ) is due to highlight the earnings slate on Monday, followed by tech titans like Alphabet (NASDAQ:GOOGL) and Tesla (NASDAQ:TSLA) later in the week. Parliamentary elections in Japan cast some doubt over crucial trade talks between the country and the United States, while the Wall Street Journal reports that the European Union is preparing new countermeasures against American firms should negotiations between the bloc and Washington fail to result in a deal before an impending tariff deadline. 1. Futures higher U.S. stock futures pointed higher on Monday, as investors geared up for a parade of corporate earnings this week. By 03:38 ET (07:38 GMT), the Dow futures contract had gained 118 points, or 0.3%, S&P 500 futures had risen by 15 points, or 0.2%, and Nasdaq 100 futures had advanced by 61 points, or 0.3%. The main indices on Wall Street finished the previous session in muted fashion, with the blue-chip Dow Jones Industrial Average slipping by 0.3% and the benchmark S&P 500 and tech-heavy Nasdaq Composite broadly flat. Weighing on sentiment was a media report that the Trump administration was considering placing a minimum tariff of 15% to 20% on the European Union, above the current baseline rate of 10%. Elsewhere, data showed that American consumer sentiment brightened in July, even as worries remained around the prospect of possible tariff-driven inflationary pressures emerging. President Donald Trump’s aggressive trade agenda was one of the major themes dominating the accelerating stream of second-quarter company results. Yet, despite a somewhat murky outlook for the rest of 2025, earnings from more than 80% of the firms who have reported so far have topped analysts’ expectations. Cryptocurrency stocks, meanwhile, climbed, fueled by the passage in the U.S. House of Representatives of a bill developing a regulatory framework for the digital coin industry. Coinbase Global (NASDAQ:COIN) rose by 2.2% and Robinhood Markets (NASDAQ:HOOD) added 4.1%. 2. Verizon to report; earnings deluge ahead this week The pace of the quarterly earnings season picks up in the coming days, with over 85% of S&P 500 companies yet to post returns. On Monday, telecommunications group Verizon will headline the slate of results before the opening bell, while chipmaker NXP Semiconductors (NASDAQ:NXPI) is expected to highlight a string of reports after the close. Texas Instruments (NASDAQ:TXN) and Coca-Cola (NYSE:KO) are scheduled to report on Tuesday, followed by Google-owner Alphabet and electric car manufacturer Tesla on Wednesday. Intel (NASDAQ:INTC), Union Pacific (NYSE:UNP) and Honeywell International (NASDAQ:HON) are also due to open their books on Thursday, and Phillips 66 (NYSE:PSX) and AutoNation (NYSE:AN) will be among the names rounding out the week on Friday. Roughly 12% of the S&P 500 has reported during the young earnings season. Of those, 86% have beat their per-share earnings expectations and 67% have delivered higher-than-anticipated sales. Some investors have flagged that the relative early strength of the reporting period could lead to increasingly heightened expectations for incoming earnings. However, the start has still been broadly positive, even as businesses deal with an uncertain economic landscape marked by concerns over the impact of global trade tensions. 3. Japanese parliamentary elections in focus A coalition led by Japanese Prime Minister Shigeru Ishiba’s ruling party is set to lose its majority in the upper house, public broadcaster NHK reported on Monday, casting fresh doubts over the trajectory of trade talks with the United States. Exit polls showed Ishiba’s Liberal Democratic Party and coalition partner Komeito falling short of the 125 seats needed to keep control of Japan’s upper house, which was a key goal of Ishiba’s. Ishiba told NHK that he still intended to stay on as prime minister and party leader, amid growing calls for his removal. Sunday’s loss comes after Ishiba’s ruling LDP suffered a drastic defeat in October’s lower house election, which reflected consistently souring public faith in the party. Promises of more government welfare and tax cuts from opposition parties, such as the Constitutional Democratic Party of Japan, also appeared to have swayed voters. The result and questions around Ishiba’s future threaten to potentially disrupt crunch trade talks with the U.S. Ishiba said over the weekend that he has spoken with Trump as negotiations go "truly down-to-the-wire." 4. EU preparing new retaliatory trade measures against U.S. - WSJ Japan’s discussions with the White House are one of a series of negotiations that are reportedly being held as an impending August 1 deadline for Trump’s elevated "reciprocal" tariffs to take effect edges closer. One crucial unknown revolves around the fate of U.S. talks with the European Union. The European bloc has been pushing for Washington to agree to maintain a baseline 10% duty, but U.S. officials told the EU’s trade chief last week that they expect Trump to demand more concessions, the Wall Street Journal reported. These would include a baseline tariff of 15% or higher, the paper added. In response, Germany -- Europe’s biggest exporter and economic powerhouse -- has joined France in backing a more confrontational stance with the Trump administration, the WSJ said. The EU is even mulling fresh measures to hit back against U.S. companies that go beyond already outlined retaliatory levies on goods should a deal not be reached, according to the report. 5. China stocks upbeat after loan prime rate hold China’s Shanghai Shenzhen CSI 300 and Shanghai Composite averages rose 0.7%, while Hong Kong’s Hang Seng index added 0.6%, after the People’s Bank of China left its benchmark loan prime rate unchanged at historic lows on Monday, as widely projected. The hold comes amid some expectations that Beijing will slow its pace of monetary stimulus, especially after China and the U.S. agreed to lower their respective trade tariffs against each other in May and June. China’s monetary policy is expected to remain largely expansionary, heralding more stimulus support and rate cuts from Beijing as the world’s second largest economy grapples with sluggish growth. Hong Kong-listed Chinese internet firms were a major outperformer in the past week, especially after artificial intelligence major Nvidia (NASDAQ:NVDA) signaled that it will resume selling a key chip in the country. Nvidia’s chips are crucial for China’s AI ambitions, which are spearheaded by majors such as Alibaba (NYSE:BABA), Baidu (NASDAQ:BIDU), and Tencent Holdings Ltd (F:NNND).

Investing.com - U.S. stock futures tick up ahead of a week filled with key earnings from S&P 500 companies. Verizon (NYSE:VZ) is due to highlight the earnings slate on Monday, followed by tech titans like Alphabet (NASDAQ:GOOGL) and Tesla (NASDAQ:TSLA) later in the week. Parliamentary elections in Japan cast some doubt over crucial trade talks between the country and the United States, while the Wall Street Journal reports that the European Union is preparing new countermeasures against American firms should negotiations between the bloc and Washington fail to result in a deal before an impending tariff deadline. 1. Futures higher U.S. stock futures pointed higher on Monday, as investors geared up for a parade of corporate earnings this week. By 03:38 ET (07:38 GMT), the Dow futures contract had gained 118 points, or 0.3%, S&P 500 futures had risen by 15 points, or 0.2%, and Nasdaq 100 futures had advanced by 61 points, or 0.3%. The main indices on Wall Street finished the previous session in muted fashion, with the blue-chip Dow Jones Industrial Average slipping by 0.3% and the benchmark S&P 500 and tech-heavy Nasdaq Composite broadly flat. Weighing on sentiment was a media report that the Trump administration was considering placing a minimum tariff of 15% to 20% on the European Union, above the current baseline rate of 10%. Elsewhere, data showed that American consumer sentiment brightened in July, even as worries remained around the prospect of possible tariff-driven inflationary pressures emerging. President Donald Trump’s aggressive trade agenda was one of the major themes dominating the accelerating stream of second-quarter company results. Yet, despite a somewhat murky outlook for the rest of 2025, earnings from more than 80% of the firms who have reported so far have topped analysts’ expectations. Cryptocurrency stocks, meanwhile, climbed, fueled by the passage in the U.S. House of Representatives of a bill developing a regulatory framework for the digital coin industry. Coinbase Global (NASDAQ:COIN) rose by 2.2% and Robinhood Markets (NASDAQ:HOOD) added 4.1%. 2. Verizon to report; earnings deluge ahead this week The pace of the quarterly earnings season picks up in the coming days, with over 85% of S&P 500 companies yet to post returns. On Monday, telecommunications group Verizon will headline the slate of results before the opening bell, while chipmaker NXP Semiconductors (NASDAQ:NXPI) is expected to highlight a string of reports after the close. Texas Instruments (NASDAQ:TXN) and Coca-Cola (NYSE:KO) are scheduled to report on Tuesday, followed by Google-owner Alphabet and electric car manufacturer Tesla on Wednesday. Intel (NASDAQ:INTC), Union Pacific (NYSE:UNP) and Honeywell International (NASDAQ:HON) are also due to open their books on Thursday, and Phillips 66 (NYSE:PSX) and AutoNation (NYSE:AN) will be among the names rounding out the week on Friday. Roughly 12% of the S&P 500 has reported during the young earnings season. Of those, 86% have beat their per-share earnings expectations and 67% have delivered higher-than-anticipated sales. Some investors have flagged that the relative early strength of the reporting period could lead to increasingly heightened expectations for incoming earnings. However, the start has still been broadly positive, even as businesses deal with an uncertain economic landscape marked by concerns over the impact of global trade tensions. 3. Japanese parliamentary elections in focus A coalition led by Japanese Prime Minister Shigeru Ishiba’s ruling party is set to lose its majority in the upper house, public broadcaster NHK reported on Monday, casting fresh doubts over the trajectory of trade talks with the United States. Exit polls showed Ishiba’s Liberal Democratic Party and coalition partner Komeito falling short of the 125 seats needed to keep control of Japan’s upper house, which was a key goal of Ishiba’s. Ishiba told NHK that he still intended to stay on as prime minister and party leader, amid growing calls for his removal. Sunday’s loss comes after Ishiba’s ruling LDP suffered a drastic defeat in October’s lower house election, which reflected consistently souring public faith in the party. Promises of more government welfare and tax cuts from opposition parties, such as the Constitutional Democratic Party of Japan, also appeared to have swayed voters. The result and questions around Ishiba’s future threaten to potentially disrupt crunch trade talks with the U.S. Ishiba said over the weekend that he has spoken with Trump as negotiations go "truly down-to-the-wire." 4. EU preparing new retaliatory trade measures against U.S. - WSJ Japan’s discussions with the White House are one of a series of negotiations that are reportedly being held as an impending August 1 deadline for Trump’s elevated "reciprocal" tariffs to take effect edges closer. One crucial unknown revolves around the fate of U.S. talks between the European Union. The European bloc has been pushing for Washington to agree to maintain a baseline 10% duty, but U.S. officials told the EU’s trade chief last week that they expect Trump to demand more concessions, the Wall Street Journal reported. These would include a baseline tariff of 15% or higher, the paper added. In response, Germany -- Europe’s biggest exporter and economic powerhouse -- has joined France in backing a more confrontational stance with the Trump administration, the WSJ said. The EU is even mulling fresh measures to hit back against U.S. companies that go beyond already outlined retaliatory levies on goods should a deal not be reached, according to the report. 5. China stocks upbeat after loan prime rate hold China’s Shanghai Shenzhen CSI 300 and Shanghai Composite averages rose 0.7%, while Hong Kong’s Hang Seng index added 0.6%, after the People’s Bank of China left its benchmark loan prime rate unchanged at historic lows on Monday, as widely projected. The hold comes amid some expectations that Beijing will slow its pace of monetary stimulus, especially after China and the U.S. agreed to lower their respective trade tariffs against each other in May and June. China’s monetary policy is expected to remain largely expansionary, heralding more stimulus support and rate cuts from Beijing as the world’s second largest economy grapples with sluggish growth. Hong Kong-listed Chinese internet firms were a major outperformer in the past week, especially after artificial intelligence major Nvidia (NASDAQ:NVDA) signaled that it will resume selling a key chip in the country. Nvidia’s chips are crucial for China’s AI ambitions, which are spearheaded by majors such as Alibaba (NYSE:BABA), Baidu (NASDAQ:BIDU), and Tencent Holdings Ltd (F:NNND). Before you buy stock in INTC, consider this: ProPicks AI are 6 easy-to-follow model portfolios created by Investing.com for building wealth by identifying winning stocks and letting them run. Over 150,000 paying members trust ProPicks to find new stocks to buy – driven by AI. The ProPicks AI algorithm has just identified the best stocks for investors to buy now. 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A recent NHK poll asked that question to prospective voters, and the majority answered “measures to deal with rising prices” and “social security and the declining birthrate.”

Analysts See More Volatility in Yen, Stocks After Japan Election  Bloomberg.com

SINGAPORE (Reuters) - Japan’s ruling coalition possibly lost its majority in the upper house, exit polls showed after Sunday’s election, potentially heralding political and market turmoil as a deadline looms on tariff negotiations with the United States. While the ballot does not directly determine whether Prime Minister Shigeru Ishiba’s shaky minority government falls, it may imply either policy paralysis or a bigger fiscal deficit depending on what the ruling party does next and how strong the opposition becomes. QUOTES: RONG REN GOH, PORTFOLIO MANAGER, EASTSPRING INVESTMENTS, SINGAPORE: "The risk of coalition loss is well appreciated, and arguably priced in -- weaker yen, higher yields. We probably focus attention towards how the fiscally dovish parties do, to see whether the trade has more legs. "Now we have got to see who won the seats from them and the two parties markets probably will be focused on are the DPP and Sanseito. "I think the difficulty comes from the rest of the parties forming another coalition but I’m admittedly not a political expert here and I don’t know how easy it will be for the government to open the spigot. I suspect these are issues we will not have visibility on in the immediate future."

Japón vota para renovar su Cámara Alta en una elección decisiva para el gobierno de Ishiba…

Japón vota para renovar su Cámara Alta en una elección decisiva para el gobierno de Ishiba…

※本記事は短篇 物語的エッセイとして執筆しています。 あくまで一つの想像力の産物として、お楽しみください。 この記事は2日間のみ公開させて頂きます。 2025年、参議院選挙。 私たちの目の前で繰り広げられようとしている、この壮大な舞台のタイトルは、こうではないだろうか。「シナリオ」と。 それは、実に巧妙に書かれた脚本だ。 主役は「日本人」と名付けられ、敵役として「外国人」という存在が用意される...

Tokyo is being squeezed by its biggest enemy and by its closest friend.

(Reuters) -Japan’s Liberal Democratic Party ruling coalition may lose its majority in the upper house in an election on Sunday, which could heighten calls for the government to boost spending and cut tax. Here is a guide on how the election outcome could affect Japan’s fiscal and monetary policy: LOOMING POLITICAL UNCERTAINTY Recent media polls show the LDP coalition could lose its majority, heightening the risk of political instability when the country is struggling to strike a trade deal with the U.S., and stoking fears of an increase in debt. Japan’s debt burden is the highest in the developed world at about 250% of GDP. Prime Minister Shigeru Ishiba is regarded as a fiscal hawk, but concern over possible increased spending by parties to ensure political support on Tuesday pushed up bond yields to multi-decade highs. Yields may rise further if the chance of big spending or a sales tax cut increases. WOULD JAPAN HAVE A NEW PRIME MINISTER? If the election loss is small, Ishiba could remain prime minister and seek opposition parties’ cooperation to pass bills through parliament. Faced with a big defeat, Ishiba could step down and his party will hold a leadership race to choose a successor. Depending on the extent of loss, there is a slim chance a new premier could be chosen from an opposition party. WOULD JAPAN SEE BIGGER SPENDING? Regardless of the election outcome, Japan will increase spending as Ishiba has pledged to offer cash payouts to households to ease the cost of living. The estimated 3.5 trillion yen ($23.6 billion) in payouts will be funded by tax revenues. But spending may balloon if the LDP coalition suffers a big loss, as it would heighten calls from within the party and opposition forces to take bolder steps to cushion rising living costs. Some analysts expect Japan to compile an extra budget around autumn this year to fund spending of at least 10 trillion yen, which will likely require additional debt issuance. HOW LIKELY IS A CUT TO JAPAN’S SALES TAX RATE? Japan’s sales tax rate is set at 10%, except for food items at 8%. Ishiba has shunned opposition calls to slash the sales tax, which funds social welfare costs for a rapidly ageing population. An election defeat could force Ishiba to cut sales tax, which would leave a huge hole in Japan’s finances. Excluding proceeds from debt issuance, the sales tax is Japan’s biggest source of revenue. In fiscal 2025, it collected 25 trillion yen, or 21.6% of total budget. Analysts say halving the tax rate would cut revenues by over 10 trillion yen. A sales tax cut will require passing legislation through parliament, so will not take place until April at the earliest. WHAT WOULD BE JAPAN’S WORST-CASE SCENARIO? A worst-case scenario is a credit rating downgrade on Japan’s sovereign debt, which could trigger a triple selling of bonds, yen and Japanese stocks - and boost the cost of dollar funding for Japanese banks. Moody’s Ratings has said an increase in tax cut pressure could be negative for Japan’s rating depending on the size and duration of the cut. It rates Japan A1, the fifth-highest level. HOW WOULD THE ELECTION OUTCOME AFFECT BOJ POLICY? The ruling coalition has given a quite nod to gradual interest rate hikes, as has the biggest opposition Constitutional Democratic Party of Japan. If the clout of other smaller opposition parties increases, the BOJ could come under pressure to go slow in rate hikes. ($1 = 148.1800 yen)

By Kevin Buckland and Rocky Swift TOKYO (Reuters) -Japanese government bond investors are bracing for a potential power shift in upper house elections this weekend that could end up worsening the country’s already frail finances. Prime Minister Shigeru Ishiba’s sliding popularity has analysts and investors questioning whether even his modest goal of retaining a majority is achievable. Defeat could bring anything from a shift in the composition of the coalition to Ishiba’s resignation, though even the least disruptive scenario is still expected to see more stimulus-minded political viewpoints gain sway. "As the noise towards yet more fiscal spending picks up, we have increased our underweight in Japan as a whole," said Ales Koutny, head of international rates at Vanguard. "Japan is going down a similar path as the UK did a couple of years ago," Koutny said. "If no fiscal restraint, then the bond market will start to put pressure on the economy." Japan’s debt burden is the highest in the developed world at about 250% of GDP. Concerns about promises of fiscal largesse from opposition parties backing tax cuts were instrumental in sending yields on Japan’s longest-dated government bonds (JGBs) surging to record peaks in late May. The Ministry of Finance was able to restore some calm to the market with plans to reduce issuance of 20-, 30- and 40-year bonds to address a supply-demand imbalance for those tenors, with traditional demand from life insurers dropping sharply this year. The Bank of Japan’s reticence to raise interest rates further against an uncertain global economic backdrop is also keeping investors sidelined. "If such a demand-less market continues and investors foresee no rate hikes within this fiscal year, JGB volatility will go up, especially in the long end," said Kentaro Hatono, a fund manager at Asset Management One, who says he’s adopting a "wait-and-see" stance due to the risks of the yield curve steepening after the election outcome. The persistent fragility of the so-called super-long sector has been on display for the past week, as opinion polls showed a sharp drop in Ishiba’s approval ratings. Benchmark 30-year JGB yields vaulted 13 basis points to 3.17% on Monday, bringing them just shy of the all-time high of 3.185% from May 21. A week earlier, those same yields had surged as much as 22.5 basis points over two days to 3.09% on July 8. Barclays calculates that the rise in 30-year yields currently factors in about a three percentage-point cut to Japan’s 10% consumption tax rate. "Even if the ruling parties retain their majority in the upper house, they would still be unable to pass budget bills, including the upcoming supplementary budget, without the cooperation of the opposition parties," the bank’s Japan-based analysts wrote in a research note. "In this context, we believe there will likely be a convergence toward an expansionary budget proposal." All three of the leading opposition parties espouse some form of consumption tax cuts, with the populist, right-wing Sanseito party proposing a phasing out of VAT altogether. The policy has gained sway with the public as well: a recent poll by the Asahi newspaper showed 68% of voters thought a sales tax cut was the best way to cushion the blow from rising living costs. Fiscally hawkish Ishiba has eschewed that option in favour of cash handouts. A poor election result for the ruling coalition will trigger a sell-off in super-long JGBs by so-called real money investors, including life insurers and institutional investors, predicts Toshinobu Chiba, a fund manager at Simplex Asset Management. "If the opposition parties win, the government deficit will see a huge expansion," Chiba said. "The JGB yield curve will steepen by a lot."