Global Market Updates
• Wall Street equities settled mixed on Thursday’s close (Jan 4, 2024), DJI closed up, +0.03%, S&P 500 fell -0.34%, and Nasdaq closed lower by -0.53%.
• Stocks generally closed lower as interest rate sensitive technology stock faced pressure on Thursday. This followed better-than-expected US reports on the labor market, which led to higher bond yields and lowered expectations for Fed rate cuts.
• US Treasury 10-yr yields surged by +8 bps, setting at 3.99%, while the shorter-termed UST 2-yr yields climbed by 5bps at 4.33%.
• The 10-yr yields rebound from the yesterday’s decline reaching 4% territory, following the release of positive employment data, indicating a robust labor market.
• US weekly initial unemployment claims fell -18,000 to 202,000, surpassing the anticipated of 216,000. Additionally, the US December ADP employment change surged by +164,000, surpassing expectations of +125,000. Both reports signal a robust labor market.
• From Asia, China's December Caixin services PMI surged by +1.4 to reach a five-month high of 52.9, surpassing expectations of 51.6.
• Global bond yields on Thursday moved higher; the German bund 10-yr yield rose by +10.0 bps to 2.12%, the UK gilt 10-yr yield ticked up by +8.8 bps to 3.72%. The Japanese GB 10-yr yield closed up by +0.10 bps to 0.62%.
Domestic Market Updates
• Indonesian benchmark series of LCY government bonds closed lower on Thursday (Jan 4, 2024), with the 10-yr benchmark yield rose +1.36 bps to 6.64%.
• IDR weakened against the USD (USD/IDR rose by +0.06% to 15,490) at Thursday’s close.
• The Ministry Of Finance reported a significant increase of 26.9% in the absorption of the 2023 food security budget compared to 2022, in anticipation of the El Nino factor. We see this anticipation as potentially supporting agricultural productivity and helping to maintain the stability of food commodities, which contribute to inflation.
• On Thursday’s Indo GB series trading, FR101 and FR100 led the bond market with high trade volumes of IDR1.90tn and IDR1.37tn, respectively. Additionally, FR77 and FR81 also maintained notable 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 6.45-6.60% for today.
• Attractive Indo GB series to be traded today : FR0040, FR0081, FR0096, FR0100.
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