Global Market Updates
• Wall Street equities saw a minor uptick on Tuesday (Dec 19, 2023), DJI close up, +0.68%, S&P 500 closed up +0.59%, and Nasdaq closed up by +0.49%.
• Stocks on Tuesday wrapped with a modest increase, buoyed by hints from the Fed Richmond suggesting possible interest rate cuts if recent inflation improvements persist.
• US Treasury 10-yr yields closed up by -2 bps to reach 3.93%, followed by shorter-termed UST 2-yr yields that fell also by -2 bps hitting 4.41%.
• The 10-yr yield continued its declined on Tuesday, as investors anticipated key US economic data that could shed light on the Fed’s rate trajectory later in the week.
• US November housing starts, soared by 14.8% MoM to 1.56mn, stronger than expectation of decline to 1.36mn. However, building permits dropped by 2.5% to 1.460mn, below the anticipated 1.465mn, hinting a weaker future construction outlook.
• From Japan, The yen sharply declined following the BOJ’s decision to maintain the world's last negative interest rate on Tuesday, without specific references hinting at the prospect of an interest rate hike.
• Global bond yield on Tuesday moved lower; the German bund 10-yr yield fell -6.3 bps to 2.01%, the UK gilt 10-yr yield climbed +0.8 bps to 3.69%. The Japanese GB 10-yr yield rose +0.68 bps to 0.68%.
Domestic Market Updates
• Indonesian benchmark series of LCY government bonds closed lower on Tuesday (Dec 19, 2023), with the 10-yr benchmark yield dropping -0.70 bps to 6.49%.
• IDR bounced against the USD (USD/IDR fell by -0.50% to 15,505) on Tuesday, IDR strengthened against the USD amidst market anticipation ahead of the BI Board of Governors Meeting (RDG BI) outcome.
• On Tuesday, The SBSN auction saw a significant decline, dropping by 40% compared to the previous auction. The total awarded amount was IDR4tn out of the total indicative target of IDR11,9tn.
• The auction for SVBI held yesterday saw limited market interest, likely due to liquidity competition among the central Bank, government, and banking sector. The total awarded amount was USD19mn of the total indicative target of USD50mn.
• On Tuesday’s Indo GB series trading, FR96 and FR101 retained their leading positions in the bond market, with substantial trading volumes reaching IDR2.28tn and IDR1.23tn, respectively. Furthermore, FR89 and FR77 showed considerable activity.
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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