UST10Y was traded with a yield of 3%, and the price of Brent crude oil broke through the level of USD 120/barrel, potentially revising the inflation outlook and increasing FFR. The S&P 500 fell more than 1%, snapping a two-day rally. The Dow Jones and Nasdaq indexes closed down 0.8% and 0.7%, respectively. Investors are also keeping an eye on the reopening of recession risks, as a slight yield inversion occurred in UST5Y (3.03%) and UST10Y (3.02%). Yield inversion illustrates that investors are more interested in long-term bonds than short-term bonds, indicating there is potential risk in the near term.
Issuance of Global Sukuk valued at USD 3.25 billion, supports May forex reserves to USD 135.6 billion (Vs. Apr. USD 135.7 billion), amid rupiah depreciation approaching IDR 14,500/USD. In addition to the positive sentiment of forex reserves, yesterday’s upward motion of the JCI was also supported by the large capitalization stock GOTO, which recorded a transaction value of more than IDR 2 trillion, with a 3.8% strengthening. Meanwhile, investors are still watching the forex reserves decline for the third month in a row, with the value in May affected by the policy to ban exports of CPO and its derivatives. CPO exports are one of the biggest contributors to foreign exchange. Amid the market’s wait-and-see attitude ahead of US inflation data, NHKSI Research projects that the JCI will move upward again, within a range of 7,150-7,260.
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