He writes, “The opposition Liberal Democratic Party won the Japanese election over the weekend. Incoming Prime Minister Shinzo Abe has called for ‘unlimited easing’ from the Bank of Japan, and also suggested he will pursue an expansionary fiscal policy. The yen is down on expectations for increased policy accommodation from the Bank of Japan, while there is also increased interest on the outcome of the central bank’s monetary policy announcement later this week.”
Looking to the US, Bennenbroek believes that there are signs of possible, but modest, progress in the ongoing budget talks. Republican House leader Boehner indicated a willingness to raise tax rates for households earning more than $1 million, although President Obama has rejected that proposal. Investors have so far remained hopeful that an agreement can be reached in a sufficiently timely manner. However, with a year-end deadline for a deal now looming closer, those budget developments – or lack thereof – should become increasingly important through the end of December.