Stress Tests Bank, liquidity enough to face economic downturn. Nasdaq led Wall Street’s gains, up 1.6% as yields on UST10Y fell 15bps to hit the psychological 3% level. The results of the Fed’s Stress Tests on 34 of the largest US banks with assets of more than USD 100 billion state that there is sufficient liquidity for banks to distribute dividends, and conduct stock buybacks in the event of an economic downturn. This adds to the positive catalyst, after the banking sector previously recorded good performance. For the record, the scenario of Stress Tests 2022 this time was designed before the Russian invasion and hyper-inflation.

Survey: June Inflation Breaks 4%. BI’s Dovish stance to maintain BI 7DRRR 3.50% is amid June CPI YoY which is projected to reach 4.14% (Vs. May 3.55%), based on Bloomberg survey data. This projection touches the upper limit of BI’s annual inflation target, a range of 2%-4.2% YoY. However, BI 7DRRR being in line with market expectations, received a positive response of a 14-point increase in the JCI. The Healthcare and Consumer Non-Cyclicals sectors, which are resilient to high inflation, rose more than 1%. The increase in the Healthcare sector amid the depreciation of the rupiah, had a negative impact on the Pharmaceutical sub-sector, which has a dominant import of raw materials. NHKSI Research projects that the JCI will move upward in the range of 6,900-7,150.

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