Global Market Updates
• Wall Street equities maintained their gradual climb on Tuesday (Dec 12, 2023), DJI rose +0.48%, S&P 500 edged up +0.46%, and Nasdaq closed up +0.82%.
• Stocks gained support following Tuesday’s US Nov CPI report, which showed a five-month low, raising expectations for potential interest rates cuts by the Fed in the first half of 2024.
• US Treasury 10-yr yields slid by -0.30 bps to reach 4.23%, followed by shorter-termed UST 2-yr yields that rose +0.20% to 4,73.
• The bond yields saw a decrease this Tuesday, led by a drop in the Treasury yield as investors assessed recent inflation data ahead of the Fed's final rate decision this year.
• US Nov-23 CPI eased to +3.1% YoY from +3.2% YoY in Oct-23, in line with expectations. Correspondingly, the Nov-23 core CPI remained at +4.0% YoY, mirroring expectations and maintaining the 2-1/4 year low in Oct-23.
• The markets are anticipating the conclusion of the two-day FOMC meeting set to end on Wednesday. Meanwhile they are discounting in a 1% chance of a +25 bp rate hike at the Tue/Wed FOMC meeting.
• Global bond yield on Tuesday mostly closed lower; the German bund 10-yr yield fell -4.4 bps to 2.22%, the UK gilt 10-yr yield tumbled -11.0 bps to 3.96%. The Japanese GB 10-yr yield slid -4.40 bps to 0.72%.
Domestic Market Updates
• Indonesian benchmark series of LCY government bonds closed higher on Tuesday (Dec 12, 2023), as the 10-yr benchmark yield rose +2.61 bps to 6.66%.
• IDR weakened against the USD (USD/IDR rose by +0.68% to 15,615) on Tuesday. The depreciation persisted despite the DXY dipping -0.2% to 103.89.
• The 5-year CDS climbed to 74.52, though it stabilized between 74-75 in the last month, indicating an improved Indonesian economy with increased foreign funds.
• Investors responded positively to the issuance of SVBI auction yesterday, successfully garnering 92% of the total indicative target of USD100mn, the total awarded amount was USD92.1mn.
• During Tuesday’s Indo GB series trading, FR100 and FR101 maintained their status as the bonds with the highest trading volume in the bond market, recording substantial activity at IDR5.71tn and IDR4.25tn, respectively. FR77 and FR89 also shown significant trading activity.
Market Forecast
• Given the recent developments that unfolded within the global and domestic markets, we expect the 10-yr Indo GB yield to move within the range of 6.50-6.70% for today.
• Attractive Indo GB series to be traded today : FR0040, FR0081, FR0096, FR0100.
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