Global Market Updates
• Wall Street equities had a mixed performance on Monday’s close (Feb 12, 2024). DJI rose by +0.33%, S&P 500 inched down by -0.09%, and Nasdaq slid by -0.30%.
• Stocks settled mixed with the DJI reaching a new all-time high. Stocks faced downward pressure from long liquidation ahead of Tuesday's monthly US consumer price report. Hawkish comments from Fed Bowman also weighed on stocks, indicating that current interest rates are adequate to curb inflation, and rate cuts are not deemed appropriate in the immediate future.
• US Treasury 10-yr yields remained unchanged at 4.17%, while 2-yr yields edged down by -2 bps to 4.46% on Monday. The Treasury yield moved slightly lower as investors anticipated key economic data and awaited Fed comments on interest rates.
• The markets await Tuesday's US January CPI report for direction, with consensus expecting consumer prices to ease to +2.9% YoY from December's +3.4% YoY. Additionally, Jan CPI ex-food and energy is projected to ease to +3.7% YoY from December's +3.9%, marking a new 2-1/2 year low.
• The markets are pricing in a 18% probability of a -25 bps rate cut at the March 19-20 FOMC meeting and a 71% chance for the subsequent meeting on April 30-May 1.
• Global bond yields were mixed on Wednesday; the German bund 10-yr yield increased by +2.8 bps to 2.38%, the UK gilt 10-yr yield slid by -2.90 bps to 4.06%, and The Japanese GB 10-yr yield inched up by +0.01 at 0.73%.
Domestic Market Updates
• Indonesian benchmark series of LCY government bonds closed lower on Wednesday (Feb 12, 2024), with the 10-yr benchmark yield rose +3.85 bps to 6.64%.
• The IDR strengthened against the USD (USD/IDR fell by -0.26% to 15,595) at Wednesday’s close. The Rupiah found support ahead of the commencement of the Presidential election tomorrow, while the market continues to anticipate the release of the US CPI on Tuesday.
• Indonesia's foreign exchange reserves registered USD145.1bn at the end of Jan-24, showing a slight decline from the Dec-23 position of USD146.4bn. The decline is partly due to the maturity of the government’s foreign debt payments.
• During Tuesday’s SUN auction, investors exhibited considerable interest, securing winning bids totaling IDR24tn out of a total bid of IDR52.63tn. The series auctioned includes SPN03240515 (new issuance), SPN12250213 (new issuance), FR101, FR100, FR98, FR97, and FR102. Furthermore, FR101 secured the highest awarded bid, boasting a bid-to-cover ratio of 2.06 and awarded IDR9.65tn from the total bid of IDR19.90tn.
• On Wednesday’s Indo-GB series trading, FR101 and FR100 were notable in the bond market, experiencing high trade volumes of IDR8.65tn and IDR6.40tn, respectively. Moreover, FR102 and FR77 exhibited significant trading frequency.
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 6.55-6.70% for today.
• Attractive Indo GB series to be traded today : FR0081, FR0091, FR0096, FR0100 FR101.
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