IDR: USD/IDR - Rupiah Stronger Again Following Yesterday’s Rally.
- USD/IDR is down at 15,640 in Jakarta morning; versus yesterday's close of 15,735.
- Today’s strength is follow from yesterday’s rally which saw the rupiah through the 200-day EMA of 15,717 and the 100-day EMA of 15,684. This morning’s rally has seen IDR break through the 20-day EMA of 15,650, for the first time since mid-October. The next technical level for the currency is the 50-day EMA of 15,610.
- Bloomberg Asia dollar spot index is higher by 0.05% at the open and the Bloomberg Dollar spot index is 0.07% higher.
- USD/IDR one-month implied volatility is down this morning to 6.8650%, versus 6.9725% at yesterday’s close.
- Indonesia's 10-year bond yield is at 6.767%
- Indonesia 5 yr USD CDS at 67bps (yesterday close 68bp, 5-year low 58bps in 2020).
Headlines
- Indonesia’s Prabowo to Visit Xi Before Possible Trump Meeting (source: BBG)
- Record Dollar Reserves Set to Boost Indonesia’s Currency Defence (source: BBG)
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ASIA STOCKS: Chinese Equities Struggle On Lack Of Further Stimulus
Chinese equities are struggling to maintain momentum, especially in property stocks (Mainland Property Index -.150%, HS Property -1.25%, BBG China Prop Gauge -2.70%) as investor uncertainty weighs on the market. Small-cap Indices are also struggling with CSI 1000 -4.05% & CSI 2000 -5.50%, which is falling for the first time in eight sessions.
- The CSI 300 (-3.95%) and ChiNext (-5.60%) are both sliding which could mark the beginning of a potential consolidation phase. While Hong Kong markets saw a modest rebound on the open those moves have since been reversed, this follows Tuesday's sharp declines, with the HSI falling the most since 2009, while sentiment was further dampened by news that around 40 A-share listed companies announced plans to reduce their holdings following the recent rally, signaling potential profit-taking ahead.
- Despite positive holiday spending data, including a 9% y/y rise in retail sales and a 23% y/y increase in average daily home sales in 25 cities, the rally appears unsustainable without further policy support. Investors are skeptical about Beijing's stimulus measures, while travelers made 10.2% more trips during the holiday compared to 2019 (pre-pandemic levels), spending only increased by 7.9%, indicating that while more people traveled, they were spending less than before the pandemic which underscores that consumer sentiment remains muted.
JGBS: Subdued Session Ahead Of FOMC Minutes, Local Calendar Light
At the Tokyo lunch break, JGB futures have weaker, -9 compared to the settlement levels.
- Today, the local calendar will see Machine Tool Orders later. Tomorrow sees PPI data for September.
- Cash US tsys are 1-2bps richer, with a steepening bias, in today’s Asia-Pac session after yesterday’s modest gains. The market now awaits today’s September FOMC minutes ahead of Thursday’s CPI/PPI data on Thursday and Friday respectively.
- The cash JGB curve has twist-flattened, pivoting at the 30-year, with yields 3bps higher to 1bp lower. The benchmark 10-year yield is 0.8bps higher at 0.935%.
- Swap rates are little changed.
CHINA PRESS: China Must Avoid Drastic Stock Fluctuations
China must avoid excessive stock market volatilty in the short term, which will require more precise supervision and expectation management, said 21st Century Business Herald in a commentary. Authorities must strictly prohibit investors from using credit funds to engage in speculation and guard against overseas funds using Hong Kong stocks as leverage to amplify A-share fluctuations through various offshore financial instruments, the newspaper said.
