Negative Correlation of Stock and Bond Market. Wall Street stock market rose more than 2%, driven by the increase in megacap growth stocks, and energy stocks, after coming under pressure in the past week. Meanwhile, yield on UST10Y moved up again to the level of 3.28%, approaching the high level of 3.48% last week. The bond market responded negatively to demands for a repeat of the 75 bps FFR hike for the July period to achieve the 2% YoY inflation target. The market’s movement earlier in the week was as it looks forward to the Fed Chair’s testimony to the US Senate Banking Committee on Wednesday, providing clues to rate hikes and the economic outlook.
Ice Newcastle coal nearing psychological level of USD400/ton, prompting energy sector to lead sector gain of nearly 2%. JCI rose nearly 1%, in tandem with the increase in the majority of Asian stock markets. Rupiah which was kept at IDR14,800/USD, and the strengthening of the benchmark SUN occurred amid market focus on monetary policy. BI is projected to prefer liquidity normalization through a gradual increase in the Statutory Reserves, compared to the BI 7DRRR hike for the June period. Meanwhile, SUN rallied before the end of the government’s front-loading strategy for the 1H22 period. NHKSI Research projects that the JCI will move upward in the range of 7,000-7,150.
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