Global Market Updates
• Wall Street equities posted a modest gain on Wednesday’s close (Feb 14, 2024). DJI surged by +0.40%, followed by S&P 500 increased by +0.96%, and Nasdaq rose by +1.30%.
• Stocks rebounded on Wednesday after a more than 1% drop in the three main indices on Tuesday, propelled by a stronger-than-expected January inflation report. Stocks received support when Fed's Goolsbee indicated that a brief period of slightly higher inflation would align with the Fed's 2% target, contributing to a positive market sentiment. Additionally, better-than-expected Q4 reports also further boosted stocks recovery.
• US Treasury 10-yr yields fell by -4.0 bps to 4.27%, and 2-yr yields slid by -8 bps to 4.56% on Wednesday. Treasury yield moved lower on Wednesday, before jumping on Tuesday’s following the release of a stronger-than-expected January CPI reading.
• The US January Consumer Price Index (CPI) moderated to +3.1% YoY from December's +3.4%, surpassing expectations of +2.9% YoY. Meanwhile, the Jan core CPI (ex-food and energy) held steady at +3.9% YoY, unchanged from December’s 2-1/2 year low and exceeded the anticipated +3.7% YoY.
• The US MBA mortgage applications fell 2.3%, with the home-purchase sub-index down 2.5% to a 5-week low. Refinancing also dropped by 2.1%. The average 30-year fixed-rate mortgage rose by 7 bps to 6.87%.
• In the German February ZEW survey, expectations for economic growth increased by +4.7, reaching a one-year high of 19.9, surpassing expectations of 17.3.
• From Asia, Japan's economy unexpectedly contracted by -0.1% QoQ in Q4-23, marking the second consecutive quarter of GDP contraction. Japan’s Jan PPI increased by +0.2% YoY, surpassing expectations of +0.1% YoY.
• Global bond yields were mixed on Wednesday; the German bund 10-yr yield fell by -5.7 bps to 2.33%, the UK gilt 10-yr yield slid by -10.60 bps to 4.04%, and The Japanese GB 10-yr yield ended up by +0.20 at 0.73%.
Domestic Market Updates
• Indonesian benchmark series of LCY government bonds closed higher on Wednesday (Feb 13, 2024), with the 10-yr benchmark yield fell -1.17 bps to 6.63%.
• The IDR depreciated against the USD (USD/IDR rose by +0.06% to 15,603) at Wednesday’s close. We expect election sentiment to impact both the financial market and the Rupiah. The markets are likely to awaits signals before making investment and business decisions.
• On Tuesday’s SVBI auction, garnered a stronger investor response, securing USD607mn in awarded bids out of a total bid of USD808mn. The bidding rates showed a wider range compared to the previous auction, where USD442mn was awarded from a USD472mn bid total.
• On Wednesday’s Indo-GB series trading, FR100 and FR102 were notable in the bond market, experiencing high trade volumes of IDR3.11tn and IDR2.68tn, respectively. Moreover, FR102, FR87 and PBS36 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 : FR0087, FR0091, FR0096, FR0100 FR101.
Disclaimer On
