Global Market Updates
• Wall Street equities closed with a moderately higher on Thursday (Dec 21, 2023), DJI close up, +0.87%, S&P 500 closed up +1.03%, and Nasdaq closed up by +1.23%.
• Stock on Thursday closed slightly higher in response to US economic reports indicating a slowdown in the economy which was seen as dovish factor for Fed policy.
• US Treasury 10-yr yields rose by -3 bps to reach 3.89%, followed by shorter-termed UST 2-yr yields that slid by -1 bps hitting 4.33%.
• The 10-yr yield continued it’s declining trend on Thursday, along with the 2-yr yields, driven by US economic reports supporting market expectations of an upcoming Fed rate cut next year.
• The US Dec Philadelphia Fed business outlook survey fell unexpectedly to -10.5 from an expected -3.0 increase, Meanwhile US November leading indicators fell by 0.5% MoM as expected.
• The US weekly initial unemployment claims increased by 2,000 to 205,000, beating expectations of a rise to 215,000. Meanwhile, continuing claims unexpectedly dropped by 1,000 to 1.865 million, surpassing the anticipated increase to 1.880 million.
• The US Q3 GDP was revised down to 4.9% from an expected 5.2%, with personal consumption also dropping to 3.1% from the previously reported 3.6%. Furthermore, Q3 US inflation data was revised down: the GDP price index dropped to 3.3% from 3.6%, and the core PCE price index fell to 2.0% from 2.3%.
• Global bond yield on Thursday moved lower; the German bund 10-yr yield dropped -0.7 bps to 1.96%, the UK gilt 10-yr yield rose +0.1 bps to 3.52%. The Japanese GB 10-yr yield closed up +2.70 bps to 0.58%.
Domestic Market Updates
• Indonesian benchmark series of LCY government bonds closed lower on Thursday (Dec 21, 2023), with the 10-yr benchmark yield dropping -0.17 bps to 6.48%.
• IDR weakened against the USD (USD/IDR rose by +0.15% to 15,525) on Thursday, the IDR traded sideways during the final Bank Indonesia meeting of 2023 held yesterday.
• Bank Indonesia decided to maintain the BI-Rate at 6.00% during the meeting on December 20-21, 2023 to bolster Rupiah stability and proactively manage inflation within the 2.5±1% target for 2024.
• BI reported a slowdown in third-party funds (DPK) growth in Nov-23. During this period, DPK grew annually by only 3.04% YoY, indicating restricted credit expansion.
• On Thursday’s Indo GB series trading, FR70 and FR90 maintained the top spot in the bond market, boasting significant trade volumes of IDR0.97tn and IDR0.77tn, respectively. Furthermore, FR77 and PBS36 displayed 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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