Today’s Outlook:
US MARKETS: Economic data showed US consumer price inflation came in above economists’ expectations in December, raising doubts that the Federal Reserve will cut interest rates as quickly as the market expects. US Treasury yields fell, while the US Dollar weakened against the Euro and Yen but rebounded from the lows reached before this US CPI report was released. Today’s data showed the headline CPI rose 0.3% last month, with an annualized increase of 3.4%, both higher than initial estimates of 0.2% and 3.2% respectively. Nevertheless, analysts believe that this actual figure is not a bad result; they still believe that the Fed will still cut rates, though perhaps not as soon as March. Following the data, Initial Jobless Claims also surprised with a lower-than-expected actual figure of 202,000 jobless claims in the week ending Jan 5, compared to 210,000 forecast and 203,000 in the previous week. In overall, all the above data suggests the US economy remains strong and likely to avoid recession.

THE DOLLAR INDEX was last down 0.05% today at 102.29, although this position is actually slightly up from 102.20 before the data was released. The euro rose 0.09% today to USD 1.09820. The greenback’s gains narrowed slightly to 0.20% at 145.48 Yen, after reaching 146.10, the highest since December 11. The latest 10-year US TREASURY YIELD fell 4.9 basis points (bps) to 3.980%. BITCOIN reached USD 49,051, the highest since December 2021, and was last up 1.80% at $46,800. The US SEC on Wednesday night gave the green light to offer a bitcoin-based ETF. Investors’ focus will soon turn to the announcement of producer-level inflation (US PPI) figures which are also forecast to rise in December by 1.3% yoy, as well as the start of the US earnings season, with banking giants including JPMorgan Chase and Wells Fargo scheduled to report on Friday.

ASIA MARKETS: It’s China’s turn to be in the spotlight this morning, as they will release their CPI (Dec) figures which are expected to struggle out of deflationary territory, in order to improve their economy. Following that, it is also important to monitor China’s Trade Balance figures in Dec, regarding their Export & Import growth.

EUROPEAN MARKETS: Later this afternoon, UK market participants will find out how healthy the improvement in their Industrial & Manufacturing Production conditions in November, which is predicted to grow positively.

COMMODITIES: OIL rose nearly 1% in Thursday trading after Iran seized an Iraqi-owned oil tanker bound for Turkey off the coast of Oman, believed to be retaliation to the US for last year’s seizure of the same vessel and cargo. The Yemen-based Houthi militants have stepped up their largest-ever attack on the Red Sea’s commercial shipping lanes; thus further raising the prospect of widespread conflict in the Middle East area. As such, Brent futures rose 0.8%, to USD 77.41 per barrel, while US West Texas Intermediate (WTI) crude rose 0.9%, to USD 72.02. Global trade fell 1.3% from November to December 2023 as militant actions against merchant ships in the Red Sea led to a decline in the volume of cargo transported in the region. Barclays lowered its Brent Oil price forecast for 2024 by USD 8 to USD 85/barrel considering the following factors: sluggish global demand along with chaos in the Middle East; causing producers, consumers, and market participants to become paranoid about oil prices.
GOLD prices in the spot market added 0.1% to USD 2,024.69 per ounce.

Corporate News
Delta Dunia (DOID) Subsidiary Finalizes IDR 636.6 Billion Bond Issuance PT Delta Dunia Makmur Tbk’s (DOID) subsidiary, PT Bukit Makmur Mandiri Utama (BUMA), completed the issuance and listing of BUMA Bonds I Year 2023 on the Indonesia Stock Exchange (IDX), with a value of IDR 636.6 billion. The bonds are divided into three series, namely Series A amounting to IDR 422.91 billion with a fixed interest rate of 8.45% per annum with a period of 370 calendar days with full payment at maturity date. Series B amounting to IDR 200.57 billion with a fixed interest rate of 9.10% per annum with a period of 3 years with full payment at maturity date. Lastly, Series C amounting to IDR 13.14 billion with a fixed interest rate of 9.7% per annum with a period of 5 years with full payment at maturity date. PT Mandiri Sekuritas and PT Sucor Sekuritas have been appointed as the Underwriter. (Investor Daily)

Domestic Issue
Early 2024, the Government Plans to Draw IDR 36 T of New Debt The government through the Directorate General of Financing and Risk Management of the Ministry of Finance will issue Rupiah-denominated Government Bonds (SUN) early this year. The plan is carried out to fulfill part of the financing target in the 2024 State Budget. “To meet part of the financing target in the 2024 State Budget,” quoted from the Ministry of Finance’s DJPPR press release, Thursday, (11/1/2024). The auction is carried out based on Minister of Finance Regulation Number 168 / PMK.08 / 2019 concerning the Auction of Government Securities in the Domestic Primary Market. DJPPR said the auction would be held on Tuesday, January 16, 2024, starting at 09.00 WIB and ending at 11.00 WIB. The set settlement date is Thursday, January 18, 2024. In this issuance, DJPPR set an indicative target of IDR 24 trillion. While the maximum target is set at IDR 36 trillion. The SUN issued consists of 7 types. Two of them are Government Treasury Notes (SPN) and 5 types of Fixed Rate SUN with tenors of 5 years to 30 years. (CNBC Indonesia)

US10YT seems hesitant to continue its bullish wave even though US CPI figures proved to be stronger than expected, with expectations that the Fed will still cut rates this year although perhaps not as quickly as in March. In order to continue its upward swing, US10YT first needs to break back above the MA10/3.98% yield, and perch above the 4.066% yield for targets around 4.18% or 4.258% yield to be reached. ADVISE: BUY ON WEAKNESS; Average Up accordingly.

ID10YT seems to be testing the upper wedge support around 6.63% yield after being somewhat stopped on its way up at the resistance of the previous high level of 6.75%. ADVISE: BUY ON WEAKNESS; Average Up above 6.66% and 6.75% yield.

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