Several banking industry turmoil plagued the US & European markets last week, ending with US financial institutions came together to bail out First Republic Bank by USD 30 billion to save the bank from the downfall that occurred to SVB & Signature Bank. Credit Suisse also experienced the same banking assistance after the Swiss National Bank pledged up to USD 54 billion in credit support to shore up liquidity and investor confidence. Mixed economic data releases from the US reported US CPI & PPI (Feb.) data both managed to ease, to 6% and minus 0.1% YoY respectively (vs 6.4% and 0.3% previous). Meanwhile Retail Sales (Feb.) also slid by a larger than expected -0.3%, to -0.4%. However, it turns out that inflation pressure is still high as Initial Jobless Claims came out lower than expected at 192k claims (vs. 205k forecast, vs. 212k previous) signaling that the US labor market is still tight. Meanwhile, the ECB has preceded with a 50 bps rate hike at last week’s central bank meeting, as expected. As for the Eurozone CPI figure (Feb.), it remained firm at 8.5% as forecast, slightly sloping from Jan. at 8.6%. China’s economy is on the rise as evidenced by the China Industrial Production (Feb.) report which rose 2.4% YoY, higher than 1.3% in Jan. China’s Retail Trade (Jan.-Feb.) also expanded 3.5% YoY compared to the -1.8% fall last Dec. Indonesia’s Trade Balance (Feb.) posted another surplus of USD 5.48 billion, significantly above expectation of USD 3.27 billion. Meanwhile, Bank Indonesia has also set BI7DRR to remain at 5.75% (since January) as the previous rate hike is believed to be enough to control Indonesia’s inflation rate towards its target this year.
This week’s outlook:
The global market attention will still be focused on the global banking crisis. Some of the largest central banks are taking concerted steps to jointly stop the spread of the banking crisis, after the Swiss authorities managed to convince UBS Group AG to agree on buying Credit Suisse for USD 3.23 billion in a deal agreed on Sunday. The US Federal Reserve stated, along with the central banks of Canada, UK, Japan, Eurozone as well as the Swiss, they are coordinating to support market liquidity by being prepared to extend credit when needed. The interest rate decisions by the Federal Reserve and the Bank of England will be released on the same date in March 23 at their respective local times. Meanwhile, a number of economic data from around the world will also fill the short trading week for Indonesia as it is cut short by two Nyepi holidays as well as the first day of fasting month on March 22-23; starting from German PPI (Feb.) and Euro Zone Trade Balance (Jan.), followed by ZEW Economic Sentiment (Mar.); then CPI (Feb.), Retail Sales (Feb.), UK and Eurozone PMI.
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