Global Market Updates
• Wall Street equities closed lower after initially opened higher on April 15, with the DJI fell by -0.65%, the S&P 500 declined by -1.20%, and the Nasdaq closed down by -1.79%.
• On Monday, stock indexes surrendered earlier gains to close moderately lower, driven by a surge in bond yields reaching a 5-month high. Geopolitical tensions in the Middle East persisted, weighing on stocks amid concerns that Israel might retaliate following Iran’s weekend launch of a barrage of missiles and drones into Israeli territory. Additionally, weakness in megacap tech stocks further bears on the broader market.
• US Treasury 10-yr yields jumped by +13.0 bps to 4.63%, and 2-yr yields closed up by +5.0 bps to 4.93%. Treasury yields spiked as market rate cut expectations shifted back after higher inflation data reported, further fueled by escalating geopolitical tensions in the Middle East.
• The US March inflation rate surged to 3.5% YoY compared to 3.2% YoY in February and forecasts of 3.4% YoY. The CPI rose by 0.4% MoM, matching February’s increase but exceeding forecasts of 0.3% MoM. Core inflation remained steady at 3.8% YoY, in line with February and slightly above forecasts of 3.7% YoY.
• In March, US retail sales surged 0.7% MoM, outperforming the expected 0.4% MoM increase. Excluding auto sales, retail figures jumped 1.1% MoM, surpassing forecasts and marking the largest increase in 14 months.
• The US April Empire Manufacturing Survey showed a rise of +6.6 to -14.3 in general business conditions, falling short of expectations of -5.2.
• Global bond yields moved higher on Monday; The German bond yield surged by +8.1 bps to 2.44%, the UK 10-yr gilt yield increased by +10.4 bps to 4.24% and the Japanese 10-yr JGB yield closed up by +1.55 bps to 0.88%.
Domestic Market Updates
• Indonesian benchmark series of LCY government bonds closed mixed on April 5, with the 10-yr benchmark yield decreased by -0.01 bps to 6.65%, while the 2-yr yield surged by +0.13 bps to 6.34%.
• The IDR appreciated against the USD at Friday’s close on April 5 (USD/IDR fell by -0.30% to 15,845). Today marks the first day of forex spot market trading post the Eid holiday. With the index dollar up by 1.95% over the week, we anticipate the Rupiah weakening.
• Indonesia's forex reserves decreased to USD140.4bn by the end of Mar-2024, down from USD144.4bn in Feb-2024. The decline was driven by government external debt payments, corporate forex liquidity demands, and measures to stabilize the Rupiah exchange rate.
• Bank Indonesia reported that based on settlements up to April 5, 2024, foreign flows recorded a net sell of IDR34.75tn in the government bond (SBN) market, while net purchases amounted to IDR23.95tn in the stock market and IDR19.05tn in the SRBI.
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 6.55-6.70% for today.
• Attractive Indo GB series to be traded today : FR0081, FR0059, FR0101, FR0087, FR0096, FR0098.
