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Japan’s main opposition parties are likely to meet Tuesday as they weigh the possibility of rallying behind Yuichiro Tamaki as a unified candidate to take on ruling party leader Sanae Takaichi in a parliamentary vote to decide the prime minister.Following the shock collapse of the ruling coalition on Friday after an alliance lasting 26 years, the prospects for the ruling Liberal Democratic Party’s new leader Takaichi becoming premier have become increasingly murky.

The LDP has 196 seats in the more powerful lower house, the largest bloc, but if the three main opposition parties coalesce behind a single candidate they would have 210. That would be enough to secure the premiership, provided other parties outside the LDP don’t back Takaichi.Tamaki is the leader of the Democratic Party for the People, a small populist party that has grown quickly in popularity based on clear messaging and a promise to raise people’s take-home pay. With inflation topping voters’ list of concerns, the DPP’s strategy has resonated with households struggling with rising prices.

“I have the determination to become prime minister,” Tamaki said in a post on X last week. If he succeeded, that would be the first time the LDP was booted out of the government since 2009.There is also a precedent for multiple opposition parties unifying behind a single candidate to become premier despite the LDP having the biggest bloc in parliament. That happened in 1993, though the resulting government proved unstable, leading to the eventual return of the LDP to power.

Tamaki will need to win the backing of key opposition parties to stand a chance of victory and that will require overcoming differences on policy. There is a fair amount of common ground. The Constitutional Democratic Party, the Japan Innovation Party (Ishin) and the DPP agree on the need to help households cope with inflation. All fought the upper house election with pledges to reduce the sales tax temporarily, though their proposals differed.Tamaki has pointed to defense as a key issue that divides his party from the CDP, saying those differences must be overcome for any cooperation.

The CDP holds 148 seats in the lower house, the Japan Innovation Party (Ishin) has 35, and the DPP controls 27. Komeito, the party that bolted from the coalition on Friday, has 24. So if all four parties ended up collaborating on an administration, they would get just over the threshold of 233 seats to give them a majority of 234 seats.

“Neither a Takaichi government nor a Tamaki government is stable,” Pelham Smithers, managing director of UK-based Japan equity research firm Pelham Smithers Associates, wrote in a note. “Ironically, political turmoil is not a negative for the stock market, if anything, it is a positive. A political crisis basically forces the BOJ onto the sidelines, and in turn exacerbates the ‘behind the curve’ element,” he added.

As the opposition parties eye cooperation, Takaichi continues to lay the groundwork for the possibility of becoming prime minister. She is considering tapping main LDP rival and Agriculture Minister Shinjiro Koizumi as defense minister, and Chief Cabinet Secretary Yoshimasa Hayashi as internal affairs minister, according to the Yomiuri newspaper.

Source: Bloomberg Europe

One of the key technocrats who helped rebuild Indonesia’s economy after the Asian financial crisis says the budget-deficit cap that has anchored the country’s fiscal policy for decades now risks holding back growth.Dorodjatun Kuntjoro-Jakti, an economist who served under five presidents including as coordinating minister for the economy under Megawati Soekarnoputri, said “it is the right time” for the government to review long-standing fiscal rules to spur growth and lift the middle class in the world’s fourth-most-populous nation.

That includes a closely watched rule introduced in 2003 that caps the budget deficit at 3% of gross domestic product. Any changes, he said, should follow a thorough fiscal assessment to ensure the sustainability of the Southeast Asian nation’s debt.“We only have about 30 years to escape the middle-income trap,” he said in an interview. “Even right now, Gen Z are already complaining about how difficult it is to find jobs.”

Speaking from his home near the University of Indonesia, where he still teaches, Kuntjoro-Jakti said he would welcome stronger coordination among the central bank, the government and financial regulators — as long as it doesn’t threaten Bank Indonesia’s independence.“The central bank should never be allowed to turn back into becoming the ‘cashier’ for the government in financing the budget deficit,” he said, referring to practices under Suharto’s three-decade rule that ended amid the 1998 crisis.

The remarks underscore a growing question for Indonesia’s policymakers: whether fiscal restraint that once ensured stability and restored credibility with investors is now curbing ambition in the US$1.4 trillion (RM5.92 trillion) economy. Facing public anger over rising living costs and scarce jobs — unrest that flared into the worst protests in years in August — President Prabowo Subianto is pushing to revive growth to 1990s-era levels, reigniting debate over whether the post-crisis 3% deficit cap still serves its purpose.

The cap, along with a rule limiting debt to 60% of GDP, grew out of a fiscal-discipline framework established under a US$43 billion IMF rescue package that helped Indonesia recover from the crisis. Kuntjoro-Jakti, who served as ambassador to the US in the immediate post-crisis years, was Indonesia’s chief economic minister when those caps were enshrined into law.

Lawmakers are also debating changes to Bank Indonesia’s mandate as the central bank is aligning more closely with Prabowo’s agenda — part of a flurry of fiscal and monetary moves aimed at lifting growth beyond the roughly 5% average of the past decade.This year, Indonesia revived a so-called burden sharing programme in which the central bank helps shoulder some of the government’s bond interest to fund priority programmes, while the country’s new finance minister — installed in the wake of the riots — has redirected billions of dollars in state cash reserves to banks to spur lending and consumption at a time when consumer confidence is at a three-year low.

Kuntjoro-Jakti also warned that without proper checks and balances, government efforts to inject massive liquidity into the economy, among other initiatives, could risk destabilising the financial system — as seen in Mexico’s “Tequila Crisis” in the mid-1990s, when a credit and capital-inflow boom abruptly reversed, triggering a financial collapse.

“In essence, all of these are intended to foster growth,” he said. “But then my worry is: How far it will go?”A University of California graduate and member of the group of Suharto-era advisers dubbed the “Berkeley Mafia”, Kuntjoro-Jakti said any review of fiscal rules should be guided by clear policy direction and alignment with international rating agencies to preserve investor confidence.Prolonged debate without clarity, he warned, could trigger capital outflows and hurt Indonesia’s credit rating.

Despite recent unrest and youth frustration, he said he remains optimistic about Indonesia’s prospects. The government, however, will need to manage risks from global volatility and trade tensions reignited by US policy shifts under Donald Trump.“I’m not worried about this country,” he said. “We just have to manoeuvre wisely.”

Source: Theedgemarkets

The United States and China on Tuesday will begin charging port fees on ocean shipping firms that move everything from holiday toys to crude oil, making the high seas a key front in the trade war between the world's two largest economies.China said it had started to collect the special charges on U.S.-owned, operated, built, or flagged vessels but clarified that Chinese-built ships would be exempted from the levies.In details published on Tuesday by state broadcaster CCTV, China spelled out specific provisions on exemptions, including for ships built by China and empty ships entering Chinese shipyards for repair.

The China-imposed port fees would be collected at the first port of entry on a single voyage or for the first five voyages within a year, following an annual billing cycle beginning on April 17.Early this year, President Donald Trump's administration announced plans to levy the fees on China-linked ships to loosen that country's grip on the global maritime industry and bolster U.S. shipbuilding. An investigation during former President Joe Biden's administration concluded China uses unfair policies and practices to dominate the global maritime, logistics and shipbuilding sectors, clearing the way for those penalties.

The U.S. is scheduled to also begin collecting fees on October 14. Analysts expect China-owned container carrier COSCOto be most affected, shouldering nearly half of that segment's expected $3.2 billion cost from those fees in 2026.China hit back last week, saying it would impose its own port fees on U.S.-linked vessels from the same day. Jefferies analyst Omar Nokta noted that 13% of crude tankers and 11% of container ships in the global fleet would be affected.

"This tit-for-tat symmetry locks both economies into a spiral of maritime taxation that risks distorting global freight flows," Athens-based Xclusiv Shipbrokers Inc said in a research note.In a reprisal against China curbing exports of critical minerals, Trump on Friday threatened to slap additional 100% tariffs on goods from China and put new export controls on "any and all critical software" by November 1.Administration officials hours later warned that countries voting in favor of a plan by the United Nations' International Maritime Organization to reduce planet-warming greenhouse gas emissions from ocean shipping this week could face sanctions, port bans, or punitive vessel charges. China has publicly supported the IMO plan.

"The weaponisation of both trade and environmental policy signals that shipping has moved from being a neutral conduit of global commerce to a direct instrument of statecraft," Xclusiv said.

Source: TradingView

Australia’s central bank said the risk of faster inflation at a time when the labor market is “still a little tight” underpinned its decision to keep interest rates unchanged last month, reiterating that policymakers will remain cautious and data-dependent in future decisions.The Reserve Bank left its cash rate at 3.6% after back-to-back increases in monthly Consumer Price Indicator readings suggested that inflation may come in stronger than the staff’s most recent forecasts, minutes of its Sept. 29-30 meeting released Tuesday showed. The RBA said that while the monthly CPI figures are “partial and volatile” the results in housing and market services suggested the risk of increased price pressures.

“The combination of potentially higher-than-expected inflation and broadly stable labor market conditions, if sustained, could imply that the staff’s assumption regarding the balance between aggregate demand and potential supply was incorrect,” the RBA said. The board also noted “the potential lessons for Australia from the experience of some other countries where services inflation has been elevated.”

The record of meeting underscores the cautious approach to the easing cycle adopted by Australian policymakers, who have so far managed to navigate the economy to a soft landing, with consumer prices inside the bank’s 2-3% target and unemployment historically low at a little over 4%.Against a global backdrop of an unpredictable US administration and the potential for significant tariffs on China, Australia’s largest trading partner, they see the path of least regret as moving slowly.“Members observed that monetary policy was probably still a little restrictive but acknowledged the extent of restriction was difficult to determine,” the minutes showed.

Their caution contrasts with colleagues in New Zealand, who last week slashed rates by a half-percentage point, adding to their already aggressive easing as the local economy struggles. The US central bank also cut last month and Federal Reserve Bank of Philadelphia President Anna Paulson signaled she favors two more quarter-point rate cuts this year.Also pointing to a potential uptick in the economy, business confidence climbed in September, according to a National Australia Bank Ltd. survey also released Tuesday.“The September survey showed continuing positive results in the headline figures,” NAB Chief Economist, Sally Auld said. “Both business confidence and conditions appear to be consolidating just above their long-run average levels after improving through mid-2025.”

Australia will receive another round of labor market data on Thursday with economists predicting the jobless rate probably edged up to 4.3% from 4.2%. The RBA next meets on Nov. 3-4 and the strength of monthly inflation prompted some economists to scrap forecasts for any more cuts this year. The RBA has reduced borrowing costs three times since February.

In addition to the employment data, the board will have quarterly CPI that’s the most comprehensive reading of price behavior in the economy, as well as the RBA staff’s updated economic forecasts. Third-quarter inflation will be released on Oct. 29.“The flow of information since the previous meeting, the forecasts from August and their judgment about the extent of policy restrictiveness collectively implied that there was no need for an immediate reduction in the cash rate target,” members said in the September meeting minutes.

“Looking ahead, members noted that it was appropriate for the board’s decisions to remain cautious and data dependent.”

Source: Bloomberg Europe

NATO has kicked off its annual nuclear exercise, Steadfast Noon, on Monday, which is focusing mainly on securing its nuclear weapons before deployment, according to prior statements of the alliance's chief."We carry out this training to ensure our nuclear deterrent remains credible, safe, secure, and effective," NATO Secretary-General Mark Rutte has said of the two-week long drills. "It also sends a clear message to any potential adversary that we are fully capable of defending all allies against any threat."

The exercises are hosted by the Netherlands, and will involve 71 aircraft from 14 NATO members and has been conducted every year for more than a decade. Military bases in Belgium, the UK, and Denmark are also being utilized.The United States and the UK, which both maintain nuclear arsenals, form the core of NATO's nuclear deterrence strategy. While France also possesses nuclear weapons, it does not participate in NATO's nuclear planning group.

The US military is contribute F-35, refueling aircraft, and other support planes. Finland and Poland are additionally providing fighter jets. The drill is also featuring electronic warfare systems, reconnaissance aircraft, and intelligence assets.The drills come as tensions between Europe and Russia are at a high point over alleged drone incursions in European airspace which various governments from Denmark to Poland to Germany have linked to Russian intelligence, though without giving any evidence.

Russian media and officials have responded as follows:

Moscow has yet to comment on the current drills, but has previously condemned past Steadfast Noon exercises, saying they “lead to nothing but ratcheting up tensions” which are already high due to the Ukraine conflict.Russian officials have accused Western European nations of uniting in what Kremlin aide Yury Ushakov has called a collective “anti-Russian frenzy.” Ushakov said the region has been speaking in an “extremely belligerent, extremely negative” voice against Moscow while spreading “brazen lies” about it.

Earlier this month, President Vladimir Putin said Western Europe has been “whipping up hysteria” about an alleged threat of war with Russia, calling such concerns a “nonsense mantra” and urging leaders in the region to focus on domestic issues instead.Currently, US efforts to get Ukraine and Russia to the negotiating table appear to be at a complete standstill. President Trump on Monday from Israel voiced that the Ukraine war will not be settled so easily.

"I thought it would be easily settled. I thought it would be a hell of a lot easier than doing what we’ve just successfully done with Israel," he told the Knesset.

Source: Zero Hedge

Singapore's central bank kept its monetary-policy settings unchanged as it struck a somewhat cautious tone on the inflation outlook, and economic growth exceeded expectations.Core inflation is likely to trough in the near term and rise gradually over 2026 as some of the factors damping inflation fade, the Monetary Authority of Singapore said Tuesday. It has now held policy parameters steady since July, after two rounds of easing this year.The decision was expected by nine of 11 analysts in a Wall Street Journal poll.

MAS maintained the prevailing rate of appreciation of the Singapore dollar nominal effective exchange rate policy band, aiming to underpin medium-term price stability. No changes will be made to the width and level at which the S$NEER policy band is centered.The decision comes as the city-state's advance third-quarter economic growth estimates beat analysts' estimates, but still showed a sharp slowdown from the prior quarter.Singapore's gross domestic product growth expanded 3.9% on year in the first three quarters of the year, the MAS said. It expects the output gap to remain positive in 2025 and come in around 0% next year.

The central bank also tweaked its expectations for core inflation, anticipating it to average around 0.5% for 2025 and at 0.5%-1.5% in 2026. Headline inflation is likely to average 0.5%-1.0% this year and at 0.5%-1.5% the next, the MAS said.Uncertainty around the economic outlook has receded somewhat after the U.S. struck some trade deals, the MAS added.Still, further increases to tariff rates, including from product-specific duties, could affect Singapore's externally-oriented sectors, it said. Global policy uncertainty could also weigh on hiring and investment, the central bank noted.

The Singapore dollar was little moved after the decision.

The MAS uses currency as a policy tool to damp inflationary expectations and support growth as trade flows dwarf the island nation's domestic activity.To do this, the Singapore dollar operates under a managed float-currency regime based on a basket of currencies representing the city-state's major trade partners. The rate is allowed to trade within an undisclosed band.

Source: TradingView