Today’s Outlook:
MARKET SENTIMENT: November US Durable Goods Orders, November US New Home Sales
CURRENCY & FIXED INCOME: The greenback is on track for its fourth gain in five sessions, during which it has gained 1.2%. The dollar index, which measures the U.S. currency against six of its largest peers, resumed its upward trajectory. It suffered on Friday its biggest one-day drop in nearly a month following a softer-than expected reading on inflation that was still above the Federal Reserve’s 2% target rate. Treasury yields climbed on Monday to begin holiday-shortened trading week, with investor digesting new economic data. The yield on the 10-year Treasury was 6 basis points higher at 4.587%, while the 2-year Treasury was up 2 basis points at 4.338%. One basis point is equal to 0.01% and yields and prices move in opposite directions.
– Against the Japanese yen, the dollar strengthened 0.43% to 157.08. The dollar’s rise, coupled with the Bank of Japan standing holding rates steady and Governor Kazuo Ueda’s comments reducing the odds of a Japanese rate hike next month, have left the yen once again near weak levels that have recently pushed Japanese authorities to intervene to support the currency. ASIA MARKETS: Asia-Pacific stocks had a good run in 2024, with most major markets ending the year in positive territory, as the region’s central banks eased monetary policy while an AI boom lifted tech stocks. Taiwan’s Taiex led gains in the region, up 28.85% as of Dec. 23, while Hong Kong’s Hang Seng Index came in second with 16.63%. Asia successfully reduced inflation faster than the rest of the world, said Mike Shiao, chief investment officer for Asia ex-Japan at investment management firm Invesco, paving the way for monetary easing. As an aside, South Korea’s benchmark Kospi lost 8.03% YTD as of Dec. 23, making it the worst performing Asian market.
EUROPE MARKET : European markets closed just above the flatline on Monday as a shortened trading week began in the run-up to Christmas. The pan-European Stoxx 600 index provisionally ended the session 0.07% higher, with sectors in mixed territory. Meanwhile Germany’s DAX closed 0.23%.
– The euro was down 0.2% at $1.0408. The euro dipped on Monday, as market moves were being dictated by recent global central bank meetings that set expectations for diverging rate cut paths next year. European Central Bank President Christine Lagarde said the euro zone was getting close to reaching the ECB’s medium-term inflation goal, according to an interview published in the Financial Times on Monday.
COMMODITIES: Oil prices edged lower on Monday in thin trade ahead of the Christmas holiday on concerns about a supply surplus next year and a strengthened dollar. Brent crude futures settled down 31 cents, or 0.43%, at $72.63 a barrel. U.S. West Texas Intermediate crude futures fell 22 cents, or 0.32%, to $69.24 a barrel.
– Gold prices edged lower in subdued holiday-season trading on Monday, weighed down by a robust dollar and high U.S. Treasury yields as investors awaited clearer signals on the Federal Reserve’s monetary policy for 2025. Spot gold was down 0.4% at $2,611.17 per ounce. U.S. gold futures settled 0.6% lower at $2,628.20.
Domestic News
Directorate General of Taxes Says Premium Rice Remains VAT-Free as Long as PMK Rules Have Not Been Issued
The Directorate General of Taxes of the Ministry of Finance stated that premium rice will remain VAT-free as long as the Minister of Finance Regulation or PMK governing luxury goods subject to 12% VAT has not been issued. Previously, the government announced that there would be an expansion of six goods/services that would be subject to value added tax (VAT) even though they were not previously subject to it. These goods/services are now subject to VAT because they are luxurious. The goods/services in question are premium rice, premium fruits, premium meat (wagyu, kobe meat), expensive fish (premium salmon, premium tuna), premium shrimp and crustaceans (king crab), premium education services, premium medical health services, and electricity for household customers of 3,500-6,600 volt ampere (VA). Director of Counseling, Services, and Public Relations at the Directorate General of Taxes Dwi Astuti stated that the criteria for the six categories of premium goods/services will be detailed in the PMK being drafted by the government. “The government is now thinking about it, now it is really being thought about. Let’s just wait until the regulation [PMK on VAT-object luxury goods/services] comes out,” said Dwi in a press conference at the Directorate General of Taxes Office, South Jakarta, Monday (23/12/2023). However, he continued, if the PMK has not been issued until the 12% VAT applies on January 1, 2025, premium rice will remain VAT-free. “Until now, rice is zero, basic necessities are zero. If there is no regulation, it is free, like now [VAT-free],” said Dwi.
Corporate News
MDKA: Merdeka Copper Repays Debt Notes of IDR 817.71 Billion
PT Merdeka Copper Gold Tbk (MDKA) announced that it has completed the payment and repayment of the principal debt and fourth interest of the Merdeka Copper Gold Phase IV 2023 Shelf Registration Bonds Series A. The total repayment reached IDR 817.71 billion, which included IDR 800.98 billion for the principal bonds and IDR 16.73 billion for the fourth interest. MDKA Corporate Secretary Adi Adriansyah Sjoekri stated that the payment was made to PT Kustodian Sentral Efek Indonesia (KSEI) as the paying agent on December 19, 2024. “The total principal repayment and interest payment of the four bonds amounted to IDR 817,706,024,311.00, which has been deposited with KSEI,” said Adi in his statement, Monday (23/12). Funding for this repayment comes entirely from the company’s internal cash. With this repayment, all of MDKA’s obligations for bonds maturing on December 22, 2024 have been completed. (Emiten News)
Recommendation
US10YT corrected but still retained above its support at 4.520-4.522%. NHKSI is of the opinion price action will contiue to its next resistance at 4.643% before reaching the following uptrend channel resistance of resistance at 4.739%.
ID10YT corrected back to its support at 7.062%. However, there is still room for the yield to extend its rally to the uptrend channel resistance area of 7.203-7.213%.
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