Today’s Outlook:
US MARKET SENTIMENT: The U.S. Commerce Department said RETAIL SALES fell 0.9% last month, the biggest drop since March 2023, after an upwardly revised 0.7% gain in December, and well below an estimate of a 0.1% decline from economists polled by Reuters, indicating rising prices and tariff uncertainty may be causing consumers to tighten spending. Other data from the Federal Reserve showed INDUSTRIAL PRODUCTION fell 0.1% last month, lower than estimates calling for a 0.1% rise, after a downwardly revised 0.5% rebound in December, due to a sharp drop in motor vehicle production.
– On Thursday, US PRESIDENT DONALD TRUMP ordered his economic team to draw up plans for reciprocal tariffs on any countries that tax American imports, raising the risk of a global trade war, but did not impose another round of duties. On Friday, Trump again warned that BRICS countries could face tariffs from the United States if they create their own currencies.
– Investors are also watching the latest reports from the Munich Security Conference, where US VICE PRESIDENT JD VANCE accused European leaders on Friday of censoring free speech and failing to control immigration, prompting a strong rebuke from Germany’s Defense Minister and overshadowing discussions on the war in Ukraine. The meeting between Vance and Ukrainian President Volodymyr Zelenskiy ended without news of a deal for the crucial minerals at the center of Ukraine’s efforts to win Trump’s support.
FIXED INCOME & CURRENCIES: The odds of a FED FUND RATE cut of at least 25 basis points by the Federal Reserve in June have crept back up to 51.3%, after the market estimated a 40.3% probability in the previous session, according to the CME FedWatch Tool. Dallas Fed President Lorie Logan reiterated her view on Friday that although inflation data will be cooler in the coming months, the US central bank should not reduce short-term borrowing costs in response.
– The DOLLAR INDEX, which measures the greenback’s strength against a basket of currencies, fell 0.3% to 106.77 after falling to a 2-month low of 106.56, with the EURO up 0.28% at $1.0493. Against the Japanese YEN, the Dollar weakened 0.35% to 152.26 while the POUNDSTERLING strengthened 0.14% to $1.2583 against the greenback. The benchmark 10-year US TREASURY YIELD fell 4.7 basis points to 4.478% but was still on track for a weekly gain after two consecutive weeks of declines.
EUROPEAN & ASIAN MARKETS: EUROZONE GDP for the 4th quarter grew 0.9% yoy as expected, but fell quarterly to 0.1% qoq from 0.4% in the previous quarter. The Eurozone economy contracted, as evidenced by the employment change which trended downwards in the 4th quarter.
– From the continent of ASIA, what is brewing in CHINA cannot be underestimated, as they were recorded to have disbursed the largest amount of bank credit (for consumers & businesses) in (at least) the last 20 years in February, amounting to 5130 billion Yuan, suddenly 5x the amount in January. This is in line with China’s rapid development of AI-related technology in recent times, which has shaken up the likes of US giant Nvidia, and its Magnificent Seven peers.
– This morning, there is a release of the preliminary estimate of JAPAN’s Q4 GDP which turned out to beat estimates & the previous quarter, at a growth rate of 0.7% qoq; on an annualized basis at 2.8% yoy (stronger than the previous quarter’s 1.7%). Later in the afternoon, Industrial Production (Dec) data will be in the spotlight.
COMMODITIES: OIL prices fell, erasing earlier gains, as prospects of a peace deal between RUSSIA & UKRAINE were offset by delays in US reciprocal tariffs. US WTI crude fell 0.77% to $70.74 per barrel and BRENT closed at $74.74 per barrel, aka depreciated 0.37% on the day.
INDONESIA: Today is the release of the Trade Balance (Jan) data which is predicted to remain in surplus but come out at a lower figure than the previous month’s USD 2.24bn, to USD 1.91bn. However, Export growth is expected to increase to 7% while Imports may not be able to match the previous month’s level of 11%.
Domestic News
Demand for THR, Ojol Drivers Hold Massive Demo on February 17
The Indonesian Transport Workers Union (SPAI) confirmed that online transportation drivers (ojol drivers) will hold a demonstration to demand the right to holiday allowance or THR on Monday (17/2/2025). SPAI Chairperson Lily Pujiati confirmed that the action will be carried out on Monday (17/2/2025) to demand the THR Ojol. The action will be held in front of the Ministry of Manpower (Kemenaker) office. “Yes [ojol drivers will hold a demonstration], the main demand is about THR,” Lily told Bisnis, Sunday (16/2/2025). In addition to the THR, Lily revealed that other demands for action were related to tariff cuts that were too high for ojol drivers. As well as, demanding to remove low wages in the Aceng and Slot service programs. “There is a program called Aceng, the wage is cheap for long and short distances of Rp5,000. Slot [service] has rules per area and per hour, if you don’t follow the designated areas and hours,” she explained. Lily said that this program forces ojol drivers to work in other places or areas and far from home. “Even though not all areas are crowded and paid cheaply,” she added. ( Bisnis )
Corporate News
BVIC: Fat Cash, BVIC Ready to Pay Off IDR 350 Billion in Maturity Bonds
Bank Victoria International (BVIC) has IDR 350 billion in maturing bonds. This is in the form of Continuous Subordinated Bonds I Phase II of 2018. The bonds with an idBBB rating will mature on June 5, 2025. Based on the scenario, the company plans to pay off the maturing bonds using internal funds. As of the end of 2024, the cash position and placements in banks were recorded at IDR 2.7 trillion. Then it has securities of IDR 5.4 trillion. (Emiten News)
Recommendation
US10YT corrected 2.03% and has retreated back below the main uptrend channel pattern support of 4.72-4.85%. The yield is trying to continue its mid-year uptrend towards the 4.80% resistance, and is still on a stable trajectory towards the 5.0% yield.
ID10YT continued its weak rebound after reaching the yield decline target of around 6.80%, just as the RSI indicator entered the Oversold area. Resistance/closing target: MA10 at 6.92% yield
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