Global Market Updates
• Wall Street equities had a mixed performance at Friday’s close (Jan 12, 2024), DJI fell by -0.31%, S&P 500 closed up by +0.08%, and Nasdaq inched up by +0.02%.
• Stocks settled mixed with the S&P 500 reaching a 2-year high. The broader market found support on Friday from a favorable US December PPI report. Meanwhile, energy stocks saw gains as crude prices rose to a 2-week high in response to an escalating war threat in the Middle East.
• US Treasury 10-yr yields fell by -2 bps, reaching 3.96%, while the shorter-termed UST 2-yr yields tumbled by -12 bps at 4.14%.
• Treasury yields decreased following Friday’s data release showed an unexpected drop in wholesale prices for December, signaling optimism about inflation and raised the possibility of rate cuts as early as March.
• US December PPI final demand fell to -0.1% MoM and rose +1.0% YoY, weaker than expectations of +0.1% MoM and +1.3% YoY rise. Dec PPI ex-food and energy decreased to +1.8% YoY from +2.0% YoY in Nov, marked the smallest increase in three years.
• Global bond yields on Friday moved lower; the German bund 10-yr yield slipped by -5.2 bps to 2.18%, the UK gilt 10-yr yield decreased by -4.9 bps to 3.79%. The Japanese GB 10-yr yield fell by -0.40 at 0.61%.
Domestic Market Updates
• Indonesian benchmark series of LCY government bonds closed higher on Friday (Jan 12, 2024), with the 10-yr benchmark yield fell -5.30 bps to 6.65%.
• The IDR weakened against the USD (USD/IDR rose by -0.01% to 15,550) at Friday’s close, influenced by the recent surge in US inflation data. Additionally, we see escalating tension in the Middle East could exert pressure on the IDR as energy prices rise.
• Investors positively responded to Friday's SRBI auction, securing IDR19.5tn in awarded bids from a total bidding amount of IDR33.8tn, which showed a wider range of bidding rates compared to the previous auction, where IDR22.0tn was awarded from IDR31.6tn in bidding.
• Today, Indonesia's Dec-23 trade balance data will be released, which expected to reveal a surplus of USD1.92 bn, down from November's USD2.41bn surplus, primarily due to lower export forecasts at the end of 2023.
• Tomorrow, there will be a SUN auction in the local currency to fulfill a portion of the financing target in the 2024 State Budget, with an indicative target of IDR24tn.
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, FR101.
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