Global Market Updates
• Wall Street equities closed with a modest gain on Wednesday’s close (Jan 10, 2024), DJI rose by +0.45%, S&P 500 increased by +0.57%, and Nasdaq closed up by +0.75%.
• Stocks closed moderately higher as they found support on Wednesday, driven by expectations of a favorable US consumer price report anticipated on Thursday. The consensus projects a rise in US Dec-23 CPI to +3.2% YoY from +3.1% in Nov-23, while the core CPI (ex-food and energy) is expected to decline by +3.8% YoY from +4.0% in November.
• US Treasury 10-yr yields rose by +2 bps, reaching 4.04%, while the shorter-termed UST 2-yr yields edged up by +1 bps at 4.37%. This movement followed comments from Fed's Williams, who emphasized the need for policymakers to collect more evidence of declining inflation before considering interest rate cuts.
• US MBA mortgage applications surged by +9.9%, driven by a +5.6% increase in the home purchase mortgage sub-index and a substantial +18.8% rise in the refinancing sub-index. The average 30-year fixed mortgage rate increased by 5 bps to 6.81%, up from the prior week's 6.76%.
• Japan Nov-23 labor cash earnings increased by +0.2% YoY, falling short of the expected +1.5% YoY. Additionally, real cash earnings for November experienced a more significant decline, dropping by -3.0% YoY, surpassing the expected -2.0% YoY.
• Global bond yields on Wednesday moved higher; the German bund 10-yr yield rose by +2.3 bps to 2.21%, the UK gilt 10-yr yield inched up by +3.7 bps to 3.82%. The Japanese GB 10-yr yield fell by -0.50 at 0.59%.
Domestic Market Updates
• Indonesian benchmark series of LCY government bonds closed lower on Wednesday (Jan 10, 2024), with the 10-yr benchmark yield rose +0.72 bps to 6.71%.
• The IDR weakened against the USD (USD/IDR rose by +0.32% to 15,570) at Wednesday’s close. The World Bank kept Indonesia's 2024 projection steady at 4.9% but lowered the 2025 forecast from 5.0% to 4.9%. These changes may have impacted domestic financial markets and foreign investment perspectives, exerting pressure on the IDR.
• Indonesia’s Retail sales performance in Dec-23 is expected to stay strong. This is reflected from the Real Sales Index (IPR) of 217.9, showing a 0.1% YoY increase. In Nov-23, the RSI was 207.9, with a growth of 2.1% YoY. The surge was propelled by growth in motor vehicle fuel and food, beverage, and tobacco sectors.
• The government imposed a minimum 40% hike in entertainment taxes, as per Law No. 1 of 2022 on Financial Relations between Central and Regional Governments (HKPD), effective January 5, 2024. Concerns loom over its potential impact on the newly revived post-pandemic tourism sector.
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 6.55-6.75% for today.
• Attractive Indo GB series to be traded today : FR0077, FR0081, FR0096, FR0100.
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