Rates as of 0500 GMT

Market Recap

JPY is clearly the dominant story this morning. The currency plunged on news that Japans ruling coalition the socalled Liberal Democratic Party LDP and its pals in Komeito expanded its majority in the Upper House election on Sunday. They won 76 seats, well above the 56 they needed to retain their majority and 69 seats they needed to expand it.

The results will bolster PM Kishidas grip over the LDP and perhaps allow him to go the full three years without facing another national election. That will include finding a replacement for Bank of Japan Gov. Kuroda, whose term expires next April. PM Kishida is a big proponent of the current extraordinarily easy monetary policy, therefore his increased control over the party makes it more likely that hell be able to appoint a successor to Gov. Kuroda with the same priorities.

Fridays betterthanexpected US nonfarm payrolls see below pushed US rate expectations higher.

That makes a widening USJapan rate spread more likely, which is negative for JPY higher USDJPY.

Fridays US nonfarm payrolls

On the surface, Fridays US nonfarm payrolls NFP were phenomenal. The number of new jobs rose by 372k, far more than expected in the 92nd percentile of all NFPs going back to 1950. The unemployment rate stayed at 3.6, near the 50year low of 3.5. Growth in average earnings slowed a bit but remains high although below the rate of inflation, naturally.

Nonetheless there were some weak points. While the…