Summary:
Last Week Review
• Last week, South Korean President Yoon Suk Yeol announced the imposition of an “emergency martial law” during a televised briefing on Tuesday. President Yoon accused the opposition parties of paralyzing the government through what he described as anti-state activities and sympathizing with North Korea. He stated that these measures were essential to protect the country’s constitutional order.
• Last week, The risk premium on French bonds dropped and bank stocks rallied on Thursday after a widely expected no-confidence vote toppled Prime Minister Michel Barnier’s government, with focus turning to what a new government might look like. Barnier resigned and President Emmanuel Macron is hunting for a new prime minister, a day after opposition to Barnier’s 60-billion euro (USD 63 billion) belt-tightening effort led far-right and leftist lawmakers to vote his government out.
• Last week, Federal Reserve Chair Jerome Powell said the Fed can take a “little more cautious” approach in cutting rates toward neutral as the economy remains in good shape. The Fed chief pointed to a stronger-than-expected economic growth, a robust labor market and slightly higher inflation as reasons for the Fed to take a cautious approach toward finding a neutral – one that neither stimulus nor weighs on economic growth.
• INDONESIA: In the first week of December, there is the regular plethora of economic data on Monday including S&P Global Manufacturing PMI, Inflation Rate, Core Inflation Rate, and Annual Tourist Arrivals. On Friday, Bank Indonesia published the Foreign Exchange Reserve for Nov-2024.
This Week’s Outlook
• The U.S. is to publish November data on consumer price inflation on Wednesday that will give Federal Reserve officials a last look price pressures ahead of their final policy meeting of the year the following week. The Fed has cut interest rates by 75 basis points since September and markets are currently expecting another 25-bps cut at the December 17-18 meeting.
• The S&P 500 and Nasdaq Composite rose to record closing highs on Friday as expectations for further Fed rate cuts during a period of robust economic growth continued to underpin investor sentiment. That scenario historically has produced strong equity gains, and it was supported by Friday’s jobs data.
• The ECB holds it final policy meeting of the year on Thursday with economists overwhelmingly expecting another 25-bps rate cut – which would be the fourth such cut this year. Eurozone inflation ticked higher in November, but still appears to be heading towards the ECB’s 2% target.
• Oil prices fell by more than 1% on Friday, cementing weekly losses amid expectations for a supply surplus next year on the back of weak demand despite an OPEC+ decision to delay output hikes and extend production cuts to the end of 2026. Brent crude lost over 2.5% for the week, while crude oil WTI futures declined by 1.2%. OPEC+ agreed on Thursday to delay the start of planned output increases by three months to April 2024 and extended its existing production cuts until the end of 2026. But energy traders said the move failed to offset worries about weak demand, particularly in China, the world’s second-largest oil consumer.
• INDONESIA: In the second week of December, we are grapple mainly with the purchasing appetite for the Indonesian consumer. The first data we focus on is the November Motorbike Sales (-10.3% YoY) released on Sunday then November Consumer Confidence and October Retail Sales.
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