Global Market Updates
• Wall Street equities jumped on Thursday (Dec 14, 2023), DJI edged up by +0.43%, S&P 500 rose +0.26%, and Nasdaq eased by -0.15%.
• Thursday’s stock market built upon Wednesday’s rise as the Fed hinted an end to its tightening strategy. Fed Chair Powell aligned with market expectations of rate cuts in 2024, diverging from the prior notion of a potential rate hike.
• US Treasury 10-yr yields fell by -12 bps to reach 3.92%, followed by shorter-termed UST 2-yr yields that slid -9 bps to 4.37%.
• Treasury yields extended their decline after the Fed meeting maintained interest rates. Additionally, the Fed revised down its inflation forecast for next year from 2.6% to 2.4%.
• US weekly initial unemployment claims fell by 19,000 to 202,000, surpassing the expected 220,000. US Nov-23 retail sales unexpectedly rose by +0.3% MoM from the anticipated -0.1% MoM.
• From the Europe, The BOE voted 6-3 to maintain the benchmark rate at 5.25%, suggesting a need for a prolonged "restrictive" policy. Three policymakers advocated for a +25 bp rate hike.
• Global bond yield on Thursday moved lower; the German bund 10-yr yield dropped -5.4 bps to 2.11%, the UK gilt 10-yr yield fell -4.1 bps to 3.78%. The Japanese GB 10-yr yield tumbled -4.40 bps to 0.72%.
Domestic Market Updates
• Indonesian benchmark series of LCY government bonds closed lower on Thursday (Dec 14, 2023), as the 10-yr benchmark yield tumbled -10.61 bps to 6.63%.
• IDR closed stronger against the USD (USD/IDR fell by +0.40% to 15,660) on Thursday, supported by the weakened DXY index and a downtrend in yields following the Fed’s dovish comments.
• Amid the Fed's anticipated policy, the Composite Stock Price Index (IHSG) surged in Thursday's trading, closing at 7,176, boasting a 1.42% increase with a transaction value of IDR15.62tn.
• The Ministry of Finance highlighted Indonesia's debt at IDR 7,950.52 trillion, approximately 37.68% of GDP, below the 60% GDP limit. SBN constitutes 89%, while loans account for 11%, indicating a safe and managed government loan condition.
• During Thursday’s Indo GB series trading, FR101 and FR98 maintained their position as the bonds with the highest trading volume, recording substantial activity at IDR3.24tn and IDR2.88tn, respectively. FR98 and FR91 also saw significant trading.
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 6.50-6.70% for today.
• Attractive Indo GB series to be traded today : FR0040, FR0081, FR0096, FR0100.
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