A series of economic data that came out last week further strengthened the prediction that global Central Banks will still keep interest rates high. Starting from the US Consumer Price Index (Jan.) at 6.4% YoY, which was still higher than expected although it managed to be lower than the previous month’s 6.5%; and the US Producer Price Index (Jan.) which actually strengthened above expectations to 6% YoY, vs. the surveyed 5.4%. The US labor market is still solid with the latest Initial Jobless Claims coming in lower than economists expected. US Retail Sales (Jan.) strengthened at a 2-year high to 3%, implying the economy is still resilient in terms of consumer spending. Fed officials said that the next FOMC Meeting (March) may need to implement a higher rate hike amount, such as 50 bps. This discourse means that it will follow the ECB’s decision regarding the planned 50 bps rate hike next month. In response to the US macroeconomic data, the 10-year Treasury yield touched its highest point since Dec 30 as investors priced in the Fed’s increasingly hawkish move. The US Dollar index also touched a 6-week high of 104.24. Domestically, Indonesia’s macroeconomic data still showed solid fundamentals with Indonesia’s Trade Balance returning to growth posting a surplus for the 33rd consecutive month, at USD3.87bn (Jan.). BI’s RDG decided to keep BI7DRR at 5.75%, putting the brakes on the hike after 6 consecutive months of lifting rates to the current level which they feel is enough to bring core inflation back to the target level of 3% this year. With a series of negative and positive sentiments mentioned above, it still not yet able to bring JCI towards 7000 level and only moved by 0.22% over the past week, with a Foreign Net Sell of IDR 1.1 trillion.
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