Global Market Updates
• Wall Street equities settled with a modest uptick on Monday’s close (Jan 29, 2024). DJI increased by +0.59%, S&P 500 rose by +0.76%, and Nasdaq closed up by +1.12%.
• Stocks achieved moderate gains on Monday, propelling the S&P 500 and DJI to new record highs. Despite initial mixed trading in the afternoon, a rally ensued as T-note yields fell. This was prompted by the Treasury's unanticipated cut in quarterly borrowing estimates, attributed to higher tax receipts as a sign of economic strength.
• US Treasury 10-yr yields fell by -7 bps to 4.08%, and 2-yr yields downed by -5 bps to 4.29% on Monday. Treasury yields declined as investors anticipated a week of crucial economic data and awaited the Fed first interest rate decision of the year.
• The US Jan Dallas Fed manufacturing outlook survey declined by -17.0 points, reaching an 8-month low of -27.4, falling below the expected -11.0.
• On Monday, the US Treasury lowered its quarterly borrowing estimate to USD760bn from the previous USD816bn, citing increased tax receipts amid a robust economy.
• The markets are discounting the chances for a -25 bp rate cut at 3% at the next FOMC meeting on Jan 30-31 and 51% for that same -25 bp rate cut for the following meeting on March 19-20.
• Global bond yields were mixed on Monday; the German bund 10-yr yield fell by -6.4 bps to 2.23%, while the UK gilt 10-yr yield decreased by -8.80 bps to 3.88%. The Japanese GB 10-yr yield rose by +0.60 at 0.72%.
Domestic Market Updates
• Indonesian benchmark series of LCY government bonds closed higher on Monday (Jan 29, 2024), with the 10-yr benchmark yield fell -0.28 bps to 6.62%.
• The IDR appreciated against the USD (USD/IDR fell by -0.06% to 15,810) at Monday’s close. Rupiah continues to strengthen ahead of the Fed’s interest rate announcement this Thursday, while the DXY edges up to 103.44.
• The government is set to distribute Cash Transfer Program (BLT) to 18.8 million Beneficiary Families in February. This food aid, totaling IDR600,000 for three months, aims to boost purchasing power, replacing the concluded El- Nino BLT program from last year.
• On Monday’s Indo-GB series trading, FR70 and PBS38 were notable in the bond market, experiencing high trade volumes of IDR2.50tn and IDR1.84tn, respectively. Moreover, FR77 and FR81 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 : FR0087, FR0091, FR0096, FR0100 FR101.
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