Japan Plans to Double Early Stimulus Predictions

After receiving a strong sign of confidence following the upper house election victory, leaks of the newly proposed fiscal stimulus package indicates that the program will number approximately JPY 20 trillion with a tremendous allocation of that program devoted to infrastructure spending.  While the measures have not yet been approved by the cabinet, a rubber stamp that is not anticipated before early August, the fiscal stimulus amount matches estimates that were nearer to the higher end of the range anticipated by analysts and economists.  Although counteracting the uncertainty that has arisen from the British referendum decision was cited as a major influence for how the plans have evolved, the main purpose of this fiscal package remains domestic, with attention directed towards improving disaster resilience and local transportation systems.  The Yen has weakened in response to stimulus expectations, with GBPJPY retreating modestly from intraday highs.

With Chinese “teapot” refiners flooding international markets with gasoline and other refined products, fears are once again growing that the pace of production outstrips supply by a wide margin.  Further evidence of oversupply came from the latest Energy Information Administration weekly inventory report which underlined the growth in gasoline stockpiles, after the number of barrels in storage climbed by 911,000.  Despite crude stockpiles falling an additional -2.342 million barrels, production in the United States is once again creeping higher as maintenance concludes in Alaska, reviving output from the state.  Imports of crude oil to the US also rose, indicating that producers may be looking to take advantage of remaining onshore storage space in the US to wait out the recent downturn in prices for a longer-term recovery.  Oil prices surged higher following the announcement while natural gas prices slipped lower ahead of the EIA Natural Gas Storage Report.