Global Market Updates
• Wall Street equities saw a modest gain on Friday’s close (Jan 5, 2024), DJI climbed by +0.07%, S&P 500 rose by +0.18%, and Nasdaq closed up by +0.10%.
• Friday started with stocks opening lower but later surged into positive territory following dovish comments from Fed Barkin in the afternoon. His remarks about potential interest rate cuts as the economy stabilized and confidence grew regarding downward inflationary trends.
• US Treasury 10-yr yields surged by +6 bps, setting at 4.05%, while the shorter-termed UST 2-yr yields climbed by 2 bps at 4.40%.
• The 10-year yields continued to climb following the robust US December payrolls report, leading to increased bond yields and reducing expectations for imminent interest rate cuts.
• US Dec nonfarm payrolls surged by +216,000, stronger than expectations of +175,000. The Dec unemployment rate was unchanged at 3.7%, defying expectations of an increase to 3.8%.
• The US Dec ISM services index fell -2.1 to 50.6, below the expected 52.5. Meanwhile, US Nov factory orders increased by +2.6% MoM, stronger than expectations of +2.4% MoM.
• Global bond yields on Friday moved higher; the German bund 10-yr yield increased by +3.5 bps to 2.15%, the UK gilt 10-yr yield rose by +6.1 bps to 3.78%. The Japanese GB 10-yr yield fell by -0.50 bps to 0.61%.
Domestic Market Updates
• Indonesian benchmark series of LCY government bonds closed lower on Friday (Jan 5, 2024), with the 10-yr benchmark yield rose +1.36 bps to 6.64%.
• The IDR weakened against the USD (USD/IDR rose by +0.16% to 15,515) at Friday’s close as market remained cautious, awaiting for further signals regarding potential interest rate cuts.
• Based on settlement data until January 4, 2024, non-residents made net purchases of IDR1.79tn in the SBN market, net purchases of IDR2.40tn in the stock market, and net purchases of IDR2.73tn in SRBI. The initial foreign flow, signals market expectations for domestic fundamentals and potential Q1-23 rate cuts.
• Investors responded positively to the issuance of SRBI auction Friday, successfully garnering IDR22.0tn in awarded bids during its Friday auction, which featured a wider range of bidding rates compared to the IDR7.8tn in the previous auction.
• On Friday’s Indo GB series trading, FR102 (new issuance) and FR100 stood out in the bond market with high trade volumes of IDR1.20tn and IDR1.01tn, respectively. Additionally, FR102 and FR81 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 : FR0077, FR0081, FR0096, FR0100.
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