Global Market Updates
• Wall Street equities had a mixed performance on Wednesday’s close (Feb 21, 2024). DJI rose by +0.13%, followed by S&P 500 up by +0.13%, while Nasdaq slipped by -0.32%.
• Stock settled mixed, as the Nasdaq 100 falling to a 2-week low. The market was impacted by long liquidation in high-flying artificial intelligence (AI) technology stocks before Nvidia’s earnings were announced. The S&P 500 and DJI defied earlier trends and close slightly higher, driven by a late short-covering rally.
• US Treasury 10-yr yields rose by +5.0 bps to 4.32% followed by 2-yr yields up by +5.0 bps at 4.64% on Wednesday. Treasury yields rose as meeting minutes from the Fed revealed a careful approach to lowering interest rates too quickly.
• The Jan 30-31 FOMC meeting minutes were hawkish, highlighting concerns about moving too quickly to ease policy and emphasizing the need to assess data carefully regarding inflation. Fed’s Bowman stated that the current economic environment does not justify an interest rate cut.
• US weekly MBA mortgage applications fell -10.6% in the week ended February 16. Home purchase and refinancing sub-indices dropped to 3-month lows, down -10.1% and -11.4% respectively. The average 30-year fixed-rate mortgage rose +19 bps to a 2-month high of 7.06%.
• Global bond yields moved higher on Wednesday, except in Japan. The German bund 10-yr yield rose by +7.6 bps to 2.45%, and the UK gilt 10-yr yield grew by +6.2 bps to 4.10%. Meanwhile, the Japanese JGB 10-yr yield edged down by -0.80 at 0.73%.
Domestic Market Updates
• Indonesian benchmark series of LCY government bonds closed higher on Wednesday (Feb 21, 2024), with the 10-yr benchmark yield fell -1.57 bps to 6.59%.
• The IDR strengthened against the USD (USD/IDR fell by -1.57% to 15,635) at Wednesday’s close. The Rupiah appreciated following BI’s decision to maintain the interest rate at 6.00%, while DXY slipped by -0.03% to 104.04.
• As of February 20, 2024 YTD BI has bought government securities (SBN) amounting to IDR34.2tn, with IDR9.1tn in the primary market and IDR25.1tn in the secondary market.
• Indonesia has been admitted to start the membership process with the Organization for Economic Co-operation and Development (OECD). Indonesia is set to become the sole Southeast Asian (ASEAN) country to join the OECD, making it the third Asian nation to do so after Japan and Korea.
• On Wednesday’s Indo-GB series trading, PBS038 and FR101 were notable in the bond market, experiencing high trade volumes of IDR2.03tn and IDR1.68tn, respectively. Moreover, FR102, FR91 and FR81 exhibited significant 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 6.55-6.70% for today.
• Attractive Indo GB series to be traded today : FR0087, FR0091, FR0096, FR0097, FR0100 FR101.
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