FINLAND T-BILL AUCTION PREVIEW: On offer next week

• RES 4: 134.54 61.8% retracement of the Dec 2 - Jan 14 bear leg           
• RES 3: 134.06 High Dec 23 ‘24  
• RES 2: 133.71 High Feb 5 and a reversal trigger
• RES 1: 133.23 Intraday high               
• PRICE: 132.54 @ 05:45 GMT Mar 3 
• SUP 1: 133.46 High Feb 28 
• SUP 2: 131.83/26 Low Feb 24 / 19 and the bear trigger            
• SUP 3: 131.00 Low Jan 24 and a key short-term support
• SUP 4: 130.28 Low Jan 15 and the bear trigger   

Bund futures have pulled back from their recent highs. For now, a short-term bullish theme remains intact, following recent gains. Price has cleared resistance at 132.97, the Feb 13 high, and this signals scope for a climb towards 133.71, the Feb 5 high. A break of this level would strengthen a bullish theme. The short-term bear trigger has been defined at 131.26, the Feb 19 low. The first important support lies at 131.83, the Feb 24 low.

• China studying countermeasures against further US tariffs (source: Global Times)
• The National Bureau of Statistics of China recently released data showing that in 2024, the nationwide per capita disposable income reached 41,314 yuan ($5,672), exceeding 40,000 yuan for the first time - nearly double the 21,996 yuan recorded in 2015. (source: Global Times)
• China’s equity markets are stronger today, leading into the NPC with Hang Seng up +1.3%, CSI 300 +.4%, Shanghai +0.28%, Shenzhen +0.93%.
• CNY: Yuan Reference Rate at 7.1745 Per USD; Estimate 7.2859
• Bonds remain quiet with the 10YR unchanged at 1.77%

Headline CPI inflation in February printed significantly below expectations at -0.1% y/y after +0.8% y/y. This number doesn’t signal that Bank Indonesia needs to be worried about deflation though as the start of 2025 is impacted by a 50% discount on electricity rates for some consumers. Core inflation is a better indicator of price pressures and it rose 0.1pp to 2.5%, to be at the mid-point of BI’s target corridor. After reaching a high of 16593 on Friday, USDIDR is down 0.5% today to 16488 helped by new forex rules and a softer greenback given the better risk tone. 

• Core inflation has been trending higher for the last year. It troughed in January 2024 at 1.66% y/y, while headline has been shifting lower but it has consistently been impacted by subsidies and price caps. BI’s focus has been persistently on underlying inflation as it reflects second-round effects from changes in headline. 

Indonesia CPI y/y%

• The next BI meeting is March 19 and rising core inflation, elevated USDIDR and weak IDR NEER, which is also likely to driven higher imported inflation, mean that it is likely to be on hold again. However, in the current volatile global environment and with the Prabowo government cutting spending, BI could still cut rates.
• In January, the electricity rebate drove a 22.9% fall in CPI electricity/household fuel. The discount is scheduled to be reversed in March and so headline inflation should return to positive territory this month. The utilities component fell 12.1% y/y in February down from -8.75%.
• Volatile food prices rose 0.6% y/y down from 3.1% y/y in January with the moderation due to rice, tomatoes and chilies.
• Most other categories were little changed on the year. Personal care rose 8.4% y/y up from 7.3% and transportation to 0.9% from 0.8%.

Indonesia imported inflation 

Source: MNI - Market News/Refinitiv