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TOKYO (Reuters) – Japan’s major life insurers are expected to continue purchasing Japanese government bonds (JGBs) into the second half of the fiscal year, but the pace and extent of these purchases will vary as firms strive to balance risk and return.Life insurance companies, some of the country’s largest institutional investors, have long relied on superlong JGBs as the backbone of their asset management. The strategy appears unlikely to change in the six months through March.Nippon Life Insurance and Dai-ichi Life Insurance were among a majority of life insurers planning to increase or continue to buy JGBs at a steady pace, although demand was somewhat more prominent among mid-tier firms.This trend follows an uptick in JGB yields, which have become increasingly attractive to life insurers as the Bank of Japan (BOJ) has begun normalising its ultra-easy monetary policy this year.The firms unveiled their investment strategy updates for the fiscal year ending in March 2025 in interviews and news conferences over the past two weeks.The yield on the 30-year government bond, a mainstay of many life insurers’ investment strategies, was at 2.2% at the time the companies spoke to Reuters, above major life insurers’ average liability cost level of 1.8%.Nippon Life, the country’s largest private insurer, has said it will focus on the superlong government bonds while selling off lower-yielding bonds.But companies indicated that they will buy more aggressively when yields rise further, anticipating the appeal of super-long government bonds to increase.Dai-ichi Life, the second-largest private insurer and part of Dai-ichi Life Holdings, has set “a rise to 2.5% in 30-year yields” as a guideline for accelerating purchases of the bond, a view that was in line with other life insurers.However, the prospect of yields reaching this level within the remainder of the fiscal year was seen as uncertain. Nippon Life and Meiji Yasuda Life set 2.5% as the upper limit in forecasts, while some others expected a high of only 2.4%.The BOJ is expected to hold short-term interest rates steady on Thursday, but market players expect another hike could occur at the end of the year or early 2025.    Despite Nippon Life joining mid-tier insurers indicating more appetite to buy JGBs in the second half of the fiscal year, Dai-ichi and other large firms were still a bit reluctant given they have already bought enough bonds to comply with new capital regulations coming into effect in April.Meiji Yasuda Life was among companies planning to consider diversifying to include other assets as they evaluate return versus risk. “We will not blindly buy JGBs to meet the new regulations as we have done in the past few years,” said Kenichiro Kitamura, head of investment planning department at Meiji Yasuda Life.”For us, yen bonds are just one portion of global bonds. We don’t rely on JGBs only and will diversify our investments while maintaining balance.” More

TOKYO (Reuters) – Japanese Prime Minister Shigeru Ishiba’s economic advisory panel on Wednesday called on the government, management and labour unions to swiftly start talks on raising minimum wages, a key Ishiba policy initiative that has sparked a backlash from businesses.The panel’s call was made at its first meeting under Ishiba’s administration to prioritise policies in the government’s economic package expected to be unveiled in the coming months.Ishiba’s Liberal Democratic Party (LDP) has pledged to make “untiring efforts” to raise the average minimum wage by 42% to 1,500 yen ($9.8) per hour by the end of the decade, bringing forward the target from the original mid-2030s set by the government last year.”The government, labour unions and management should swiftly start discussing the government plans to raise minimum wages in the medium and long term,” the panel said.It also proposed measures to ensure subcontractors can pass on rising costs along the supply chain, including tighter scrutiny over businesses unfairly squeezing profits at their subcontractors to suppress costs.Decades of slow wage growth in Japan has been cited by economists and policymakers as a major impediment to boosting domestic demand and fostering sustainable economic growth. While companies have started to address the pay issue in the past two years, the general consensus is more needs to be done to bring Japan closer to its global peers.The average annual salary in Japan was $42,118 in 2023, well below the $55,420 average across the OECD (Organisation for Economic Co-operation and Development) developed economies, according to OECD.The LDP’s wage-hike pledges have already sparked a backlash from businesses. The chief of Japan’s main business federation, Keidanren, said the pace of wage hikes needed to hit the LDP’s goal may be hard for many small companies to achieve.Growing political instability will also make it harder for the LDP to press ahead with key policies on its agenda after its coalition with longtime partner Komeito failed to retain a majority in lower house elections on the weekend.The panel was launched by former Prime Minister Fumio Kishida in 2021 to work out a strategy to tackle wealth disparities and redistribute wealth to households in a “new capitalism” programme.Ishiba has said he will uphold his predecessor’s new capitalism policy drive, focusing on getting the economy to fully shake off the deflation that has weighed it down for the last three decades.($1 = 153.2500 yen) More

“Stimulus could come with a cost and we should combine stimulus with reforms,” Chinese media outlet Yicai quoted Liu as saying at a forum on Tuesday. Liu said funds should be used for enhancing areas that are critical for long-term economic development.China should prioritise improving basic healthcare services for the country’s 300 million internal migrant workers as it faces a significant public healthcare shortfall, Liu said.On Tuesday, Reuters reported that China is considering approving next week new debt issuance of more than 10 trillion yuan ($1.4 trillion) to help tackle hidden local debt and fund buybacks of idle land and reduce a giant inventory of unsold flats, in coming years.Analysts expect such efforts to be a stabiliser for the economy rather than the instant growth booster that markets have craved.China is struggling to tackle a debt overhang from previous stimulus. In 2008-2009, a 4 trillion yuan spending package largely shielded China’s economy from the global financial crisis but saddled local governments with mountains of debt.Liu said last month that China could issue ultra-long-term treasury bonds within two years to generate at least 10 trillion yuan worth of stimulus to the economy, according to state media.At a key meeting in July, Chinese leaders outlined reform steps ranging from developing advanced industries to improving local government finances, but it remains unclear on how quickly such steps will be implemented.China needs to expand its middle class group from around 400 million, currently about a third of the population – to 800-900 million in the next decade by speeding up urbanisation and addressing disparities in urban-rural public services, Liu said.But Liu cautioned against stimulus through “helicopter money,” or direct cash handouts for residents, arguing this would primarily benefit wealthier residents, while low-income groups would see minimal relief given their basic needs.($1 = 7.1231 Chinese yuan renminbi) More

“I’ll tell you what, the European Union sounds so nice, so lovely, right? All the nice European little countries that get together,” Trump said during a rally in the battleground state of Pennsylvania, after promising to pass the “Trump reciprocal trade act.” “They don’t take our cars. They don’t take our farm products. They sell millions and millions of cars in the United States. No, no, no, they are going to have to pay a big price,” he said. Trump has vowed to impose a 10% tariff on imports from all countries, and 60% duties on imports from China. These would hit supply chains throughout the world, likely triggering retaliation and raising costs, economists warn.He has unnerved democratically governed Taiwan by saying that Taiwan should pay the United States for its defence and that it had taken America’s semiconductor business. The U.S. is bound by law to provide Chinese-claimed Taiwan with the means to defend itself despite the lack of formal diplomatic ties.Democrat Kamala Harris warned tens of thousands of people gathered in Washington at her biggest rally on Tuesday that her Republican opponent Donald Trump was seeking unchecked power as their tightening race for the presidency entered its final week. “This is someone who is unstable, obsessed with revenge, consumed with grievance and out for unchecked power,” Harris said during what her campaign called her closing argument before a tightly contested Nov. 5 election. More

1. Futures higherUS stock futures point higher as investors weighed earnings from megacap technology companies this week and assessed a raft of key economic indicators.By 04:30 ET (08:30 GMT), the Dow futures contract had added 38 points or 0.1%, S&P 500 futures had gained 13 points or 0.2%, and Nasdaq 100 futures had moved up by 49 points or 0.2%.The main averages on Wall Street were mixed in the prior session, with traders gauging the outlook for Federal Reserve interest rate policy over the rest of the year. Expectations that the Fed will roll out further cuts were somewhat bolstered by a report showing a decline in job openings — a proxy for labor demand — to their lowest level since 2021.By the end of the trading on Tuesday, the tech-heavy Nasdaq Composite notched a record closing high and the benchmark S&P 500 rose, while the 30-stock Dow Jones Industrial Average fell. Looming over dealmaking were results from Google-owner Alphabet, which were released after the closing bell.2. Alphabet results top estimatesAlphabet reported Tuesday third-quarter results that topped Wall Street estimates thanks in large part to solid demand for the computing and data services needed to power artificial intelligence models fueling returns at its cloud computing unit.In the three months ended in September, net income surged to $26.3 billion, up from $19.7 billion in the year-ago period and beating projections of $22.8 billion. Group-wide revenue also increased by 15% to $88.27 billion, ahead of expectations of $86.37 billion.Underpinning the returns was the Google Cloud division, where revenue spiked by 35% to $11.4 billion and operating profit jumped to $1.9 billion — up from $266 million in the corresponding timeframe last year.Advertising revenue also moved up by 10% to $65.85 billion, a slightly slower rate of growth but still resilient enough to potentially temper some concerns over intensifying competition from AI chatbots like OpenAI’s ChatGPT.”[T]his is a great quarter with little to complain about […], although investors really aren’t worried about near-term fundamentals,” analysts at Vital Knowledge said in a note. “[T]he primary concerns are more in the medium/long-term with regulatory scrutiny and search competition from the likes of AI chatbots.”Shares in Alphabet gained in premarket US trading.3. AMD shares slide premarketShares in Advanced Micro Devices slumped in premarket US trading after the chipmaker’s fourth-quarter revenue outlook just missed estimates, erasing much of its over 10% gain logged so far this year.AMD also increased its projections for sales of its key AI chips for next year to $5 billion from its prior estimate of $4.5 billion, although investors were underwhelmed by the guidance.Due to soaring AI chip demand from a host of large tech firms, AMD has been struggling to provide the necessary supply of processors. Chief Executive Lisa Su flagged that supplies of AI chips would be tight heading into 2025.In a note to clients, analysts at Morgan Stanley said AMD’s returns were “essentially in line” with consensus forecasts, adding that they were “somewhat surprised” by the sell-off in the stock.”[W]e still see 2024-25 as investment years for the AI opportunity, and think some revenue [and] earnings expectations are still too high,” the analysts wrote.4. Earnings parade marches onInvestors will be busy on Wednesday as they sift through an accelerating stream of corporate results and crucial economic data.Higlighting the earnings slate will be quarterly reports from software behemoth Microsoft (NASDAQ:MSFT) and Facebook-parent Meta Platforms (NASDAQ:META) following the closing bell on Wall Street. The two firms are both members of the so-called “Magnificent Seven” group of big-name tech stocks that have largely driven broader market movements in recent months.Elsewhere, drugmaker Eli Lilly (NYSE:LLY) is set to unveil its numbers before US markets open, as well as pharmaceutical player AbbVie (NYSE:ABBV). Construction equipment seller Caterpillar (NYSE:CAT), often seen as a bellwether of the global economy, will also report.On the data front, traders will get a first look at US growth in the third quarter. Economists predict that the initial preliminary reading of gross domestic product for the period will come in at an annualized rate of 3.0%, matching the April-June quarter’s pace.The figures could factor into how Americans view the state of the economy, a major issue for voters heading into the all-important Nov. 5 presidential election. Polls show the race between Democratic Party candidate Kamala Harris and Republican former president Donald Trump is all but tied.5. Crude gainsOil prices rose Wednesday, recouping some of the recent losses as industry data showed an unexpected draw in U.S. inventories.By 04:30 ET, the Brent contract climbed 1.2% to $71.58 per barrel, while U.S. crude futures (WTI) traded 1.3% higher at $68.11 a barrel.Data from the American Petroleum Institute showed U.S. oil inventories fell 0.57 million barrels in the past week, compared with expectations for a build of 2.3 million barrels.The official inventory data is due later on Wednesday, and if this data matches the API numbers then it could indicate supplies in the world’s biggest fuel consumer were somewhat tight. More

BEIJING (Reuters) – China’s planned fiscal package targets damaged property and local government balance sheets that weigh on the economy and fuel deflationary pressures, thus acting as a stabiliser rather than the instant growth booster markets craved.Larger-than-expected monetary stimulus last month fuelled unfettered investor speculation about a complementing, blockbuster fiscal programme to immediately revive sagging economic activity.On Tuesday, Reuters reported that China is considering approving next week new debt issuance of more than 10 trillion yuan ($1.4 trillion) in coming years.Some 6 trillion yuan will go chiefly towards lowering the off-books debt of municipalities, while 4 trillion will fund buybacks of idle land from cash-strapped developers and help reduce a giant inventory of unsold flats.The measures in the works represent a more calibrated approach to stimulus, which is a departure from previous all-out strategies to revive growth.In 2008, for example, China threw lavish resources directly at the infrastructure and property sectors to counter the effects of the global financial crisis.”The primary goal of this stimulus is clearly more about shoring up balance sheets rather than boosting near-term GDP growth,” said Christopher Beddor, deputy China research director at Gavekal Dragonomics.”It should ease the strains, but not necessarily generate instantly higher spending.”This prudent approach is partly informed by the fact that China is now suffering from the excesses of previous stimulus. But it also leaves open questions about the impact the measures will have on short- and long-term growth.That lingering uncertainty is reflected in financial markets, with Chinese stocks down about 0.5% on Wednesday, pulling other Asian markets lower.”The package can be a painkiller, rather than a booster for the economy,” said Gary Ng, senior economist at Natixis. “The economic impact may not be as big as it looks on the surface.”CLOGGED PIPESStill, a programme worth more than 8% of the world’s second-largest economy’s gross domestic product (GDP) cannot be dismissed.”It’s not just about quantity. It’s about providing a sense of stability,” said Zong Liang, chief researcher at state-owned Bank of China.Local governments, facing high debt and falling revenues, have been cutting civil servants’ pay and other expenses. Property developers starved for cash have struggled to resume work on incomplete projects, hitting jobs and incomes.China hopes to unclog the pipes that transmit money to businesses and consumers by shifting liabilities onto the central government’s healthier balance sheet, which only carries a debt load of 24% of GDP.”Policymakers seem to sense that there’s a major liquidity squeeze right now unfolding among local governments, in large part due to the property downturn, leading many local authorities to stop paying their staff and corporate suppliers,” Gavekal’s Beddor said.Tackling that squeeze releases resources into the real economy, but the impact may only show up in the second half of 2025, he added.Another lingering question is whether the package merely postpones the debt crunch.The International Monetary Fund calculates explicit local government debt at 31% of GDP at the end of 2023, that of their finance vehicles at a further 48% of GDP, and other government-related debt at another 13%.Add the central government’s debt and the total reaches 116 trillion yuan, the Fund estimates.In the property sector, Goldman Sachs estimates the unsold real estate inventory, if fully built, would amount to 93 trillion yuan.Overcoming these past excesses hinges on whether the package can kick off a virtuous growth circle that allows China to curb, rather than simply transfer these liabilities.Many analysts say a decades-old household consumption deficit holds back such prospects.Low wages, high youth unemployment and a feeble social safety net leave China’s household spending below 40% of GDP, or about 20 percentage points behind the global average.While Beijing is also expected to unveil consumer subsidies for appliances and other goods, the amount will be a tiny fraction of the gap.”It seems support for consumption remains modest,” said Louis Kuijs, chief Asia economist at S&P Global. “That means it remains unlikely that we will see a substantial improvement of the economic growth outlook or that deflation risks have been vanquished.” More

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