Quarterly results of two major US banks were below expectations, leaving Wall Street under pressure of nearly 2% in early trading. Profit expectations missed, after the Bank increased the Loan Loss Provision in anticipation of 2Q22 NPL. Investors also responded negatively to producer level inflation which exceeded expectations, with the PPI June US Final Demand rose to 1.1% MoM (Surv. 0.8% MoM) and 11.3% YoY (Surv. 10.7% YoY). Banks are facing high inflation which is worrying the public, and the economy is Soft Landing with a tendency towards Hard Landing. The pressure eased after technology stocks boosted the Nasdaq, and Fed Governor Christopher Waller’s statement supporting an FFR increase of only 75 bps, compared to 100 bps at the end of July.

Expectations of an increase in the Trade Balance surplus and export growth became positive catalysts, pushing the JCI’s Technical Rebound to strengthen 49 points to a level of 6,690. Indonesia’s Trade Balance in June is projected to have a surplus of +USD3.5B (Vs. May +USD2.9B); June exports are projected to grow +30.3% YoY (Vs. May +27% YoY), as the rupiah exchange rate stabilizes and depreciates in the range of IDR15,000/ USD. Meanwhile, investors are keeping a close eye on foreign investors who again recorded net sells, and the development of the July BI 7DRRR issue, based on Bloomberg survey data, remained at the level of 3.50%. Industry led the sectoral strengthening, rising more than 2%. NHKSI Research projects that the JCI will move upward in the range of 6,600-6,800.

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