INDONESIA CENTRAL BANK: Bank Indonesia Stands Pat On Rates
Oct-16 07:31
Bank Indonesia keeps its benchmark interest rate on hold at 6.00%, which was pencilled in by 30 out of 41 analysts in Bloomberg's survey, with the rest expecting a 25bp cut.
- The central bank maintains its growth and inflation forecasts for this year. It expects inflation to be within the +1.5%-3.5% Y/Y range this year, which is deemed to be low and within target. Indonesia's GDP growth is expected to average at +4.7%-5.5% Y/Y this year and continue to rise in 2025.
- This comes minutes after two other Asia-Pac central banks reduced rates by 25bp each, as the Bank of Thailand unexpectedly mimicked Bangko Sentral ng Pilipinas's widely anticipated move.
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EGBS: Spreads To Bunds A Little Wider With Equities Off Highs
Sep-16 07:28
10-year EGB spreads to Bunds are ~0.5bps wider today. Estoxx 50 futures are off intraday highs, but are only 0.1% below Friday's settlement levels.
- No sign of material outperformance in GGBs, after Moody’s changed Greece's sovereign credit outlook to Positive from Stable after hours on Friday (rating affirmed at Ba1).
- Moody’s noted that the change reflected “an increased likelihood of sustained strengthening in banking sector health” and potential for fiscal strength to “improve faster than currently expected”.
- The 10-year BTP/Bund spread tightened around 8bps through last week, now trading at ~137bps.
- La Repubblica reported this weekend that the Italian Government is considering levying a tax on bank/insurers extra profits (see paywalled article here: https://www.repubblica.it/economia/2024/09/14/news/tassa_extraprofitti_banche_assicurazioni-423499551/).
- The OAT/Bund spread remains below 70bps. PM Barnier is expected to continue trying to form his cabinet this week.
EQUITIES: Equity Roll pace, Expiry Friday
Sep-16 07:24
Some Desks might favour to take advantage of the quieter start of the Week to roll their position. Around 40% of the front Month volume in VGA is spread related, and for the US ESA, 76% looks to be spread related.
- S&P: 30%.
- NQA: 23%.
- DOW: 28%.
- VGA: 16%.
- DAX: 12%.
- FTSE: 16%.
GILTS: Bid At The Open, Local Risks Back To The Fore This Week
Sep-16 07:15
Gilts open a little higher, alongside global peers, but futures remain comfortably within Thursday’s range, last +22 at 101.28.
- Technicals remain bullish, initial resistance at the Sep 12 high (101.51), initial support at the Sep 10 high (100.64).
- Yields 1-2bp lower across the curve, light bull steepening.
- SONIA futures flat to +2.5, back from session highs, while BoE-dated is roughly in line with pre-gilt open levels, covered earlier.
- Feedthrough from Fed pricing swings continue to dominate, although this week’s tier 1 UK risk events will see local drivers reassert themselves, with the latest BoE decision (Thursday) and CPI data (Wednesday) due.
- Late Friday saw J.P.Morgan recommend entering tactical 10-Year swap spread narrowers, given their expectations for an uptick in the pace of BoE QT, flatness of the 10-/30-Year swap spread curve & valuations vs. SONIA.
- In local news, a group of leading economists warned Chancellor Reeves that cuts to public investment would damage the foundations of economy. No surprise there but the comments reaffirm the “difficult” choices Labour faces in the upcoming Budget.
