Global Market Updates
• Wall Street equities experienced minor losses at Wednesday’s close (Jan 17, 2024), DJI fell by -0.25%, S&P 500 slid by -0.56%, and Nasdaq closed down by -0.59%.
• Stocks closed lower on Wednesday as central bankers, including ECB’s Lagarde and ECB’s Council Knot, tempered expectations for rate cuts, echoing cautionary remarks from Fed Governor Waller on easing pace.
• US Treasury 10-yr yields increased by +3 bps to 4.10%, with the UST 2-yr yields surged by +12 bps to 4.34%, driven by Wednesday’s better-than-expected economic news has dampening expectations for a Fed rate cut.
• US Dec-23 retail sales exceeded expectations, with a +0.6% MoM increase, and ex-autos sales rose +0.4% MoM, surpassing the expected +0.2% MoM. US Jan-24 NAHB Housing Market Index increased by +7 to 44, surpassing expectations of 39.
• US Dec-23 import price index ex-petroleum was flat, below the expected +0.1% MoM. Furthermore, US manufacturing production increased by +0.1% MoM, surpassing expectations of no change.
• From Asia, China's GDP grew by +5.2% YoY, below the expected +5.3% y/y, while Dec new home price fell -0.45% MoM for the seventh consecutive month.
• China's industrial production increased by +6.8% YoY, better-than-expectations of +6.7%. Retail sales eased to +7.4% YoY weaker than expectations of 8.0% YoY. Furthermore, Dec-23 surveyed jobless rate unexpectedly increased by +0.1 to 5.1% better-than-expectations of 5.0%.
• Global bond yields on Wednesday moved higher; the German bund 10-yr yield rose by +5.8 bps to 2.31%, the UK gilt 10-yr yield jumped by +18.8 bps to 3.99%. The Japanese GB 10-yr yield grew by +1.70 at 0.62%.
Domestic Market Updates
• Indonesian benchmark series of LCY government bonds closed lower on Wednesday (Jan 17, 2024), with the 10-yr benchmark yield rose +1.71 bps to 6.68%.
• The IDR depreciated against the USD (USD/IDR rose by +0.31% to 15,640) at Wednesday’s close. The IDR weakened in line with most Asian currencies, while USD strengthened with DXY rose 0.08% to 103.43.
• The government will conduct an auction of SBSN on Tuesday, January 23. The series of SBSN to be auctioned includes SPN-S and PBS series with an indicative target of IDR12tn.
• BI decided to keep the BI-Rate at 6.00%, Concurrently, BI forecasted credit growth for 2024 at 10%-12% YoY, up from 9%-11% in 2023, propelled by positive corporate and household performance.
• BI will allocate IDR260tn in cash for Ramadan and Eid al-Fitr 2024, a notable increase from IDR195tn in 2023. This rise is driven by heightened domestic consumption, particularly with the upcoming elections.
• On Wednesday’s Indo GB series trading, FR101 and FR100 were notable in the bond market, experiencing high trade volumes of IDR2.22tn and IDR2.06tn, respectively. Moreover, FR102 and FR77 also maintained considerable 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 6.55-6.75% for today.
• Attractive Indo GB series to be traded today : FR0081, FR0091, FR0096, FR0100 FR101.
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