Summary:
USD/IDR shot up to 16110, triggered by the US TREASURY YIELD and DOLLAR INDEX surging to 5-month highs the very day the US CPI was announced, at 4.546% and 105.20 respectively; since then it is still climbing at the time of writing. The US10YT yield is now at 4.623%, and has even reached the target high of 4.666% (up to 4.70%). The DXY also continues to head north as it is currently at 106.15.
COMMODITIES: OIL prices were supported higher last week by the escalating Israel – Iran conflict, helping global benchmark BRENT crude oil prices on Friday crawl to USD 92.18/barrel, the highest since October. Some safe haven assets also rallied on Friday due to this war factor. GOLD briefly rose above USD 2,400/ounce, reaching a new record high of USD 2431.53.
EUROPEAN & ASIAN MARKETS: EUROPEAN CENTRAL BANK keeps interest rates at 4.50%. Last week was also the week of INFLATION RELEASE where GERMANY, the largest economy in Europe, also reported German CPI (Mar) which was happier than the US: at 2.2% yoy, in line with expectations which was able to cool down from 2.5% in Feb. While the second largest country in the world, CHINA the day before announced CPI (Mar) which again contracted to 0.1% yoy, below the forecast of 0.4% and also cooled from 0.7% in the previous month. On a monthly basis it actually fell into deflation as predicted, with a percentage of -1.0% mom which was greater than the -0.5% prediction. China’s Export – Import pace also remained sluggish, where March actually recorded negative growth, at -7.5% yoy and -1.9% yoy respectively; a performance that was worse than both the forecast and the previous month.
This week’s outlook:
Overall market sentiment will be heavily influenced by progress in the ISRAEL – IRAN WAR, along with the incoming 1Q/2024 earnings season; while fears of US interest rates likely to be higher for longer, still remain entrenched in markets.
This week has begun with a raft of economic data that has again demonstrated the strength of the US economy: US RETAIL SALES (Mar) turned out to grow 0.7% mom, strongly above the 0.4% forecast. Moreover, Core Retail Sales also grew to 1.1%, double above the forecast of 0.5% and also Feb’s 0.6%. Later in the week housing data such as Building Permits, Housing Starts, and Existing Home Sales for March will also be announced; plus US Industrial Production for the same month. On Wednesday in particular, market participants will look forward to the next statement from Federal Reserve Chairman Jerome Powell and several other US central bank officials on Thursday, amidst the usual weekly Initial Jobless Claims announcement session.
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