Fixed Income Update 18 Jul2024
KBVS WEEKLY FIXED INCOME UPDATE
Thursday, 18 July 2024
Flattening of The Yield Curve Will Continue to Occur
The data releases that influenced yield movements in the week of JuL 11-Jul 17, ‘24 are as follows:
• The number of people claiming unemployment benefits in the US fell by 17K from the prior week to 222K.
• The annual consumer inflation (CPI) rate in the US fell for a third straight month in Jun ‘24 to 3.0% YoY and the Core CPI decreased to 3.3% YoY.
• US producer price (PPI) increased to 0.2% MoM or 2.6% YoY.
• Retail sales in the US stalled in Jun from May ’24 or at 0.0% MoM.
Simultaneously, the Indonesia's continuing trade surplus trend will provide cushion to the stability of the Rupiah amidst improving Manufacturing PMI from key trading partners and an increase in risk-on behavior following the rising odds ratio of a Fed Rate pivot.
Bank Indonesia (BI) has maintained the BI Rate at 6.25%. We anticipate a potential earlier reduction in the Fed Rate as early as Sep '24, allowing BI to likewise decrease its BI Rate in the same month.
Regards,
Fikri C Permana - KBVS Research