Global Market Updates
• Wall Street equities showed minor losses on Friday’s close (Dec 29, 2023), DJI slid, -0.05%, S&P 500 fell -0.28%, and Nasdaq closed down by -0.43%.
• Stock took a slight dip on Friday, primarily due to year-end position refinements. Former Treasury Secretary Summers' hawkish comments, suggesting the market might undervalue inflation progress and Fed easing limitations, further contributed to this trend.
• US Treasury 10-yr yields edged up by +4 bps, reaching 3.88%, while the shorter-termed UST 2-yr yields inched down by -3 bps reaching 4.23%.
• The 10-year yield hit over 5% in October, a first since 2007, before sliding below 3.9% recently amid predictions of rate pauses and cuts in the new year.
• The US Dec MNI Chicago PMI dropped by -8.9 to 46.9, weaker than expectations of 50.0.
• Global bond yields on Friday moved higher; the German bund 10-yr yield increased by +8.0 bps to 2.02%, the UK gilt 10-yr yield rose by +4.5 bps to 3.58%. The Japanese GB 10-yr yield edged up by +1.90 bps to 0.61%.
Domestic Market Updates
• Indonesian benchmark series of LCY government bonds closed higher on Friday (Dec 29, 2023), with the 10-yr benchmark yield dropping -0.60 bps to 6.45%.
• Given the recent surge in gov’t securities (SBN), we consider the bonds to be relatively premium, with markets broadly anticipating the first rate cut to occur in March 2024.
• IDR appreciated against the USD (USD/IDR fell by -0.23% to 15,397) on Friday’s end-year close.
• As of December 28, 2023, foreign investment into SBN and BI-issued SBR amounted to net purchases of IDR80.45tn and IDR52.81tn, respectively. Conversely, in the stock market from January to December, foreign investors net sold IDR10.74tn.
• Indonesia's 5-year CDS premium reduced to 68.92 bps by December 29, 2023 from 74.26 bps in November 30, 2023. We see that this premium continues to remain below the historical average, indicating improved market confidence in lower credit risk.
• On Friday’s Indo GB series trading, FR101 and FR81 led the bond market with high trade volumes of IDR1.60tn and IDR1.24tn, respectively. FR81 and FR77 also showed 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 6.45-6.60% for today.
• Attractive Indo GB series to be traded today : FR0040, FR0081, FR0096, FR0100.
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