Dovish expectations on the Fed, yet the data is not supportive enough. Although the probability is more than 90%, the December FFR increase is only +50Bps, to 4.50%, and the peak is 4.93% in May 2023. Investors are worried that the Fed will keep the FFR at a high level for a long time. The latest data shows that US productivity in 3Q22 increased, and labor costs remained high amid the Fed’s effort to reduce inflation to the level of 2% YoY. In more detail, Nonfarm Productivity 3Q22 rose to 0.8% (vs. 2Q22 -4.1%; 1Q22 – 5.9%) or ended a two-quarter decline in a row. Meanwhile, US Unit Labor Costs in 3Q22 remained high, at 2.4% (vs. 2Q22 6.7%; 1Q22 8.5%).

Oil prices come near the lowest level this year, as US fuel supplies are above forecast. Brent’s oil prices closed at USD77.2/barrel, approaching the Lowest Level of USD73.6/ Barrel YtD. Meanwhile, WTI closed at USD72.6/Barrel, or near the lowest level of USD70.6/Barrel YtD. This depreciation of oil prices contrasts with the hopes of China’s Zero Covid Policy to ease, as China is the world’s largest importer of crude oil. Other than normalization, the decline in global oil prices happens along with the weakening projection in global economic growth. Amid the increase in Indonesia’s Foreign Exchange Reserves (Cadev) and Consumer Confidence Index, which are projected to remain optimistic, NHKSI Research sees that investors can anticipate the Technical Rebound of JCI today.

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