US stock indexes ended in negative territory, erasing earlier gains as Treasury yields rose after an auction of 30-year bonds went poorly as sales only reached USD 21 billion, with the final sale of USD 96 billion this week. Markets view the rising bond yields as an alternative investment that is more attractive than equities. On the other hand, the 2-year and 10-year bonds yields curve widened further at 85 points, the deepest inversion since the early 1980s. Thus, reigniting economic concerns even though market participants began to accept that the Federal Reserve must be hawkish again. This inverted yield curve also brought a negative sentiment to bank sector stocks, as the shorter tenor rate is higher than the long tenor, which will pressure the profitability of banking issuers’ lending margin (credit sector). Germany’s inflation rate (Jan.) is still burning at 8,7% YoY (although lower than the forecast of 8.9%, yet higher than the previous month’s 8.6%). Meanwhile, US Initial Jobless Claims managed to rise to 196K, higher than the forecast and the last week’s result.

Similarly, the JCI slid down near the end of the trading session, closing the JCI minus 42.7 points to below the 6900 level again at 6897. However, foreign is still consistently accumulating with a total daily net buy of IDR 716.98 billion, increasing their weekly stock value to IDR3.06 trillion and starting to look positive at IDR3.93 trillion on a monthly basis. The buying interest that began to picking up was evenly divided into blue chip stocks, especially banks, such as BBCA, BBRI, BMRI, and BBNI. Indonesia’s retail sales data (Dec.) rose 0.7% YoY, weaker than 1.3% in the previous month. This marked the 15th month of increase, although the pace of strengthening weakened the deepest since Sept. 2019 due to high-interest rates. NHKSI RESEARCH expects the trading to slow and tend to maintain consolidation at the end of this week. However, a warning is that if the JCI’s first support of MA10/6892 is confirmed broken, investors/traders are advised to reduce positions gradually.

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