Here’s a breakdown of the provided text, focusing on the key points and their implications:
Main Topic: Japanese Finance Minister Kato’s response to market concerns regarding the upcoming House of Councillors election and US tariff threats.
Key Concerns and Market Reactions:
House of Councillors Election:
Risk: The ruling coalition (LDP and Komeito) might lose it’s majority in the upcoming election (July 20th).
Market Impact: Government bond yields rose considerably this week due to fears of unstable economic policies and increased government spending if the ruling party loses seats.
US Tariffs:
Threat: The US plans to impose a 25% tariff on Japanese imports starting August 1st.
Market Impact: investors are worried that a weakened ruling party in the election could negatively affect tariff negotiations with the US. This could lead to a shrinking market share for Japanese export companies (like automakers) and put downward pressure on the Japanese yen.
Finance Minister Kato’s Response:
acknowledgement of Market Concerns: Kato stated he is “fully aware that there have been some pointing out that various concerns about financial management in the future might potentially be reflected in the financial markets.”
Commitment to Market Engagement: He pledged to “continue to respond politely to the voices of these markets and operate our government bond management policy.”
US Tariff Negotiations: Kato indicated that he would continue “frank and constructive discussions with the United states in readiness for an early review of tariff measures.” He mentioned this during a G7 Finance Ministers and Central Bank Governors’ meeting.
G20 Meeting and Joint Statement:
Kato attended a G20 Finance Ministers and Central Bank governors’ Meeting near Durban,South Africa.
Despite US opposition on some themes and tariff issues, the G20 adopted a joint statement, which Kato deemed “extremely meaningful” for the G20 to unite and address global economic uncertainties and risks.
* US Treasury Secretary Yellen attended the G7 conference online and had visited japan.
Overall Implication:
The Japanese government, through finance Minister Kato, is acknowledging the market’s anxieties stemming from both domestic political uncertainty (election results) and external economic pressures (US tariffs). The government aims to reassure markets by committing to responsible fiscal management and continued diplomatic engagement with the US. The G20 meeting, despite its challenges, provided a platform for international cooperation on economic issues.
