Today’s Outlook:
US MARKET: President Donald Trump said tariffs against Mexico would be paused for one month. Trump will hit Canada and Mexico with a 25% levy on imported goods over the weekend. The U.S. also issued a 10% tariff on Chinese goods. But a post from Mexico’s President Claudia Sheinbaum following a conversation with Trump appeared to calm investors. Trump later confirmed the temporary deal on Truth Social. “It was a very friendly conversation wherein she agreed to immediately supply 10,000 Mexican Soldiers on the Border separating Mexico and the United States,” he wrote, adding that negotiations for a more permanent deal would continue for the month. The pausing of the tariffs on Mexico reinforced the bullish view of some investors that tariffs for all countries could be Trump’s negotiating tool and that investors shouldn’t overreact initially.
MARKET SENTIMENT: US will publish is December JOLTS Jobs Opening which has been forecasted to be 7.88 mn. Aside from that equities and bond markets will be reacting mixed to the pause in Trump’s tariffs. Its mixed reactions because while Canada and Mexico’s tariffs were paused, China’s tariffs of 10% were not paused as well. This will become a continued dampener to any rallies in Asia.
FIXED INCOME & CURRENCIES: The dollar index was lower on Monday after U.S. President Donald Trump paused new tariffs on Mexico for one month, after the country agreed to reinforce its northern border with 10,000 National Guard members to stem the flow of illegal drugs, Trump said. Mexico and the U.S. will use the month-long suspension to engage in further negotiations, Trump said. The U.S. dollar was at 7.3254 yuan in the offshore market , having earlier pushed to a record high of 7.3765 yuan. Markets in China remain closed for the Lunar New Year and will resume trading on Wednesday. U.S. Treasury yields were mixed on Monday as investors weighed U.S. President Donald Trump’s new tariffs on goods from key trade partners and their effect on the economy. The 10-year Treasury yield was down 3 basis points at 4.535%, while the 2-year Treasury yield was up 2 basis points at 4.255%. One basis point is equal to 0.01%, and yields and prices move in opposite directions.
ASIAN MARKETS: The Indian government also pledged to reduce its fiscal deficit to 4.4% of its GDP for the year beginning April 1, a decrease from a revised 4.8% for the current year, amongst other measures. Chinese markets remain closed for the Lunar New Year holiday.
– Japan’s yen was resilient, with the dollar sliding 0.24% against the yen to 154.845. COMMODITIES: – OIL prices edged up in volatile trade on Monday but closed at a one-month low on the expiration of a higher-priced contract, as the market digested U.S. President Donald Trump’s planned imposition of tariffs on Canada, Mexico and China. Concerns over imports from two of the main crude suppliers to the U.S. boosted prices by over $1 a barrel earlier in the session before Trump paused the new tariffs on Mexico for one month as Mexico agreed to reinforce its northern border to stem the flow of illegal drugs, particularly fentanyl. Brent crude futures for April delivery rose 29 cents, or 0.4%, from where that contract closed on Friday to settle at $75.96 a barrel, while U.S. West Texas Intermediate crude futures (WTI) rose 63 cents, or 0.9%, to settle at $73.16. That was the lowest close for Brent since Jan. 2 now that the lower-priced April contract is the front-month after the expiration of the higher-priced March future on Friday. Gold prices hit an all-time high on Monday, bolstered by safe-haven inflows after U.S. President Donald Trump’s tariffs on Canada, China and Mexico added to concerns of inflation that would dent economic growth. Spot gold rose 0.8% to $2,818.99 per ounce, after hitting a record of $2,830.49 earlier in the session. U.S. gold futures settled 0.8% higher at $2,857.10. Despite the usual dampening effect of a strong dollar on the gold market, prices have been rallying due to the safe-haven demand driven by uncertainty surrounding Trump’s tariffs, said David Meger, director of metals trading at High Ridge Futures. The 25% tariffs imposed by Trump on Canadian and Mexican imports from Tuesday, along with a 10% charge on Chinese goods, fuelled fears of a trade war that could slow global growth and feed inflation.
Domestic News
Banggar DPR Criticizes Government’s Ban on 3 Kg LPG Gas Sales at Retailers
House Budget Committee (Banggar) Chairman Said Abdullah criticized the government’s policy of immediately restricting the sale of 3 kg LPG cylinders at retailers, resulting in scarcity. He requested that the government, especially PT Pertamina, provide a clear explanation to the public regarding the ban on the sale of 3 kg LPG through retailers as of February 1, 2025 so as not to cause panic. The problem, continued Said, is that a number of parties will take advantage of public panic to take advantage. He also asked the government not to implement the policy haphazardly. “The program should be carried out in stages, not immediately,” Said explained in his statement, Monday (3/2/2025). According to him, the program can be started from areas that are ready in terms of accurate data, sufficient infrastructure, and the economy of the community has recovered. Even though there is currently a scarcity in a number of areas, Said still asks the government that poor households, the elderly, and micro and small business actors can still reach 3 kg LPG cylinders. He believes the government can prepare an emergency team. (Bisnis)
Corporate News
HRTA: Hartadinata Abadi Delays the Issuance of Sustainable Bonds 2025
PT Hartadinata Abadi Tbk (HRTA) postponed the issuance of sustainable bonds II phase II in 2025. The postponement of the bond issuance with a principal amount of IDR 100 billion was postponed until further notice. Indonesian Central Securities Depository (KSEI) signed by Kadiv. Custodian Services Gusrinaldi Akhyar and Kanit. Securities Management Custodial Services Division AM. Anggita Maharani, said this on Monday (3/2/2025). The bonds will be issued on February 6, 2025 with a fixed interest rate of 7.60% per year with a three-year term and an idAAA rating from Pefindo. (Emiten News)
Recommendation
US10Y gained after reaching its narrow uptrend channel pattern support at 4.50-4.54% last week. It formed a dragonfly doji in the wake of the Trump Tariff pause for Mexico and Canada, but there was not pause for China’s tariffs. NHKSI Research expects yields to rebound as bullish sentiment rises in the medium-to-long-term despite heavy turbulence.
ID10Y has officially taken lift off after forming a doji candle and a bullish harami pattern, as expected. NHKSI Research views an upwards swing in the yield with the nearest resistance being 7.022%.
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