Global Market Updates
• Wall Street equities closed with a modest gain at Thursday’s close (Jan 18, 2024), DJI rose by +0.54%, S&P 500 surged by +0.88%, and Nasdaq closed up by +1.35%.
• Stocks wrapped up Thursday on higher note, driven by favorable US economic news surpassing expectations. The market received support as the Senate approved a continuing resolution, preventing a shutdown and securing government funding until March. The House is expected to pass the resolution later today.
• US Treasury 10-yr yields rose by +4 bps to 4.14%, with the UST 2-yr yields remained unchanged at 4.34%. Treasury yields increased as the most recent jobs data surpassed expectations.
• US weekly initial unemployment claims dropped by -16,000 to 187,000. This indicates a more robust labor market compared to the expected 205,000.
• US Dec housing starts declined by -4.3% MoM to 1.460mn, stronger than expectations of 1.425mn. Furthermore, Dec building permits rose +1.9% MoM to 1.495mn, exceeding expectations of 1.477mn.
• The US January Philadelphia Fed Business Outlook Survey increased by +2.2 but remained at -10.6, falling short of expectations which were at -6.5.
• Global bond yields on Thursday were mixed; the German bund 10-yr yield rose by +3.3 bps to 2.34%, while the UK gilt 10-yr yield fell by -5.5 bps to 3.93%. The Japanese GB 10-yr yield surged by +3.40 at 0.65%.
Domestic Market Updates
• Indonesian benchmark series of LCY government bonds closed lower on Thursday (Jan 18, 2024), with the 10-yr benchmark yield rose +1.64 bps to 6.69%.
• The IDR appreciated against the USD (USD/IDR fell by +0.12% to 15,620) at Thursday’s close. Despite fluctuations, we noticed the IDR gaining strength as market optimism responded to BI’s announcement yesterday.
• The Manufacturing Industry Business Field maintained its strength in 4Q-2023 with a PMI-BI of 51.20%, slightly lower than the previous quarter's 52.93%, but still within the expansion phase (index >50%). Additionally, the PMI-BI index is projected to improve in Q1 2024, reaching 53.39%.
• BI noted a decrease in foreign exchange earnings (DHE) stored in foreign exchange term deposits to USD2.2bn, down from the previous month's USD2.4bn. The government plans to introduce tax incentives for DHE placement to stimulate entrepreneur interest.
• On Thursday’s Indo GB series trading, FR96 and FR91 were notable in the bond market, experiencing high trade volumes of IDR1.43tn and IDR1.26tn, respectively. Moreover, FR100 and FR102 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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