Core inflation was maintained, and price in of FFR increase in June, boosted Wall Street upwards. The survey showed that core inflation, or US CPI Ex Food and Energy for May period was still under control, or at 0.5% MoM (Vs. Apr. 0.6% MoM) and 5.9% YoY (Vs. Apr. 6.2% YoY). Meanwhile, the sentiment for a 50 bps increase in the FFR June at the FOMC Meeting next week, has been anticipated by the market (price in), as the probability of a June FFR hike to 1.25% – 1.50% reaches 98%, based on CME FedWatch data. In addition to the energy sector, Wall Street’s gains were supported by rising technology stocks, as the yield on UST10Y managed to close below the 3% level.

The strengthening of JCI contrasted the pressure on the SUN market and the depreciation of rupiah. Technology led sectoral gains, up nearly 2%, making JCI slightly increase by 0.6% to a level of 7,141. Meanwhile, foreign transactions recorded a net sell of IDR 823 billion. Meanwhile, the movement of the JCI yesterday was amid
pressure from the bond market, as the yield on benchmark government securities rise in the 2 bps – 5.5 bps range, in line with the yield on UST10Y which reached 3% over the weekend. Yesterday, rupiah depreciated to the level of IDR 14,473/USD before finally closing at the level of 14,457/USD. Ahead of the release of forex reserves data, NHKSI Research projects the JCI to move upwards within a range of 7,100-7,260.

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