Global Market Updates
• Wall Street equities closed with modest gain on Thursday’s close (Jan 25, 2024). DJI increased by +0.64%, S&P 500 rose by +0.53%, and Nasdaq closed up by +0.18%.
• Stocks on Thursday closed higher on a resilient US economy; Q4 GDP beat expectations, fueled by robust consumer spending. Core PCE index remained stable, indicating subdued inflation. Despite higher jobless claim, a dovish factor for Fed policy.
• US Treasury 10-yr yields dropped by -4 bps to 4.14%, and 2-yr yields fell by -6 bps to 4.28% on Thursday. This decline was prompted by faster-than-expected Q4 economic growth, which failed to generate higher inflation.
• US weekly initial unemployment claims rose by +25,000 to 214,000, indicating a weaker labor market than the expected 200,000.
• US Q4 GDP grew +3.3% (YoY annualized), beating expectations of +2.0%. Q4 personal consumption rose +2.8%, surpassing expectations of +2.5%. The Q4 core PCE price index remained steady at +2.0%, meeting expectations.
• US Dec new orders for capital goods ex-aircraft and parts, increased by +0.3% MoM, surpassing expectations of +0.1% MoM. US Dec new home sales rose 8.0% to 664,000, beating expectations of 649,000.
• The German January IFO business climate unexpectedly dropped by -1.1 to a 3.5-year low of 85.2, below the expected increase to 86.6.
• The ECB kept its main refinancing rate at 4.50%, aiming for a prolonged period to achieve a 2% inflation return.
• Global bond yields were mixed on Thursday; the German bund 10-yr yield fell by -5.2 bps to 2.29%, while the UK gilt 10-yr yield slid by -2.70 bps to 3.98%. The Japanese GB 10-yr yield rose by +2.90 at 0.75%.
Domestic Market Updates
• Indonesian benchmark series of LCY government bonds closed lower on Thursday (Jan 25, 2024), with the 10-yr benchmark yield rose +2.26 bps to 6.63%.
• The IDR depreciated against the USD (USD/IDR rose by +0.73% to 15,825) at Thursday’s close.
• Rupiah has weakened by over 2% this month, aligning with the market’s focus shifting to the release of Q4-23 US GDP and crucial economic indicators. Furthermore, we anticipate ongoing pressure on the Rupiah given the diminishing probability of a Fed rate cut in March.
• The government will conduct a SUN Auction on Jan 30, with an indicative target of IDR24tn. We estimates the total incoming bids for this auction to range between IDR50tn and IDR55tn, with bid-to-cover ratio between 2.1x and 2.3x.
• On Thursday’s Indo-GB series trading, FR100 and FR101 were notable in the bond market, experiencing high trade volumes of IDR6.48tn and IDR3.09tn, respectively. Moreover, FR81 and FR102 also maintained 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 : FR0081, FR0091, FR0096, FR0100 FR101.
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