Global Market Updates
• Wall Street equities secured a modest gain on Thursday’s close (Feb 15, 2024). DJI surged by +0.91%, followed by S&P 500 increased by +0.58%, and Nasdaq rose by +0.30%.
• Stocks closed moderately higher propelling the S&P 500 to reach a new record high. The support came from disappointing retail sales and manufacturing production reports, which hinted a dovish for Fed policy. However, the unexpected decline in weekly jobless claims had a contrasting effect, introducing a hawkish tone for Fed policy.
• US Treasury 10-yr yields fell by -3.0 bps to 4.24%, while 2-yr yields remained unchanged at 4.56% on Thursday. The 10-yr yield declined, influenced by the retail sales and manufacturing production reports.
• Unexpectedly, US weekly initial unemployment claims dropped by -8,000 to 212,000, indicating a stronger labor market compared to the anticipated increase to 220,000.
• US retail sales for January fell by -0.8% MoM, below the expected -0.2%, marking the largest decline in 10 months. Ex-autos, retail sales unexpectedly dropped by -0.6% MoM, weaker than the anticipated +0.2%. Meanwhile, US Jan manufacturing production unexpectedly declined by -0.5% MoM, falling short of expectations for no change.
• The US Jan import price index ex-petroleum increased by +0.6% MoM, surpassing expectations of no change and marking the most substantial increase in 13 months.
• The ECB lowered its 2024 Eurozone GDP forecast to 0.8% from a Nov-23 estimate of 1.2% and reduced the 2024 Eurozone inflation forecast to 2.7% from the earlier estimate of 3.2%.
• Global bond yields were mixed on Thursday; the German bund 10-yr yield rose by +2.3 bps to 2.35%, the UK gilt 10-yr yield increased by +1.00 bps to 4.05%, and The Japanese GB 10-yr yield slid by -1.30 at 0.74%.
Domestic Market Updates
• Indonesian benchmark series of LCY government bonds closed lower on Thursday (Feb 15, 2024), with the 10-yr benchmark yield rose +0.52 bps to 6.63%.
• The IDR depreciated against the USD (USD/IDR rose by +0.05% to 15,622) at Thursday’s close. The Rupiah weakened as the DXY inched down by 0.05% to 104.67, while markets are lowering their expectations for rate cuts in May.
• BI reported that Indonesia's External Debt (ULN) in 4Q-23 amounted to USD407.1bn, growing by 2.7% YoY, an increase compared to the previous quarter's growth of 0.02% YoY. Meanwhile, Indonesia's ULN to GDP ratio has reached 29.7%, predominantly led by long-term external debt, constituting 86.6% of the total external debt.
• Statistics Indonesia reported exports from Indonesia declined by -8.06% YoY to USD20.52bn in January 2024, exceeding market expectations of a -2.7% YoY. This marks the eighth consecutive month of export decline. We noticed that the sustained decline impacted by commodity prices slump and shifts in global behavior.
• Meanwhile, imports reported declined by -3.13% YoY to USD18.51bn in January 2024 from December’s. Trade balance in January 2024 showed a surplus of USD2.02bn, driven by a non-oil and gas sector surplus of USD3.32bn.
• On Thursday’s Indo-GB series trading, FR100 and PBS32 were notable in the bond market, experiencing high trade volumes of IDR7.34tn and IDR3.10tn, 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 6.55-6.65% for today.
• Attractive Indo GB series to be traded today : FR0087, FR0091, FR0096, FR0100 FR101.
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