United States

• The results of the Fed’s December meeting will be released this week. The Fed Chairman has indicated plans to cut interest rates only twice in 2025, totaling 50 bps.
• Employment data for December will also be released, with non-farm payroll expected to increase by only 150.000 compared to a increase of 200.000 increase in November. The unemployment rate is projected to record 4.2% in December, down from 4.3% in November.

China

• The Caixin Manufacturing PMI for December recorded 50.5 compared to 51.5 in November, remains in the expansionary phase.

Indonesia

• The Manufacturing PMI for December recorded 51.2, an increase from 49.6 in November, entering the expansionary phase.
• The Inflation rate for December increased by 1.57% yoy and 0.44% mom, compared to 1.55% yoy and an increase 0.3% mom in November.
• Foreign exchange reserve for December will be released, it is predicted to reach US$ 152 billion an increase from US$ 150.2 billion in November.
• Consumer confidence for December will also be released and is expected to remain in the optimism phase; in November, it was recorded at 125.9

Market View:

Jakarta Composite Index increased by 1.82% week on week to 7,164.43. The JCI is expected to remain in positive territory this week, following nearly two months of weakening. Several domestic data points could act as catalyst for the JCI, such as the anticipated increase in foreign exchange reserve for December and consumer confidence for December, which is expected to remain in the optimistic phase. Foreign investors recorded net buy of IDR 273.62 billion over the past week, bringing the year to date (YTD) outflow to  IDR 816.97 billion. The three sectors with the strongest returns were technology, basic materials and energy which increased by 6.52%, 2.98%, and 2.48%, respectively, on a weekly basis.

On January 3 2025, the yield on the 5-year benchmark government bond (FR0104) flattened at 6.97%, while the yield on the 10-year benchmark (FR0103) flattened at 6.98%. The yield on the 15-year benchmark (FR0098) decreased to 7.08%, whereas the yield on the 20-year benchmark (FR0097) increased to 7.11%. 

The yield on the 10-year INDON bond (INDON 34) flattened at 5.41%, while the 10-year US Treasury yield also flattened to 4.60% compared to their levels on December 27, 2024 which were 5.41% and 4.63%, respectively. Indonesia's risk premium, reflected by the 5-year CDS, climbed to 78.11 bps. Meanwhile, the rupiah has appreciated by 0.24% wow to IDR 16.197.

As of January 2,2025, foreign ownership in the government bond (SUN) market was recorded at IDR 876.44 trillion (14.51% of the total outstanding), flattening from its level on December 31, 2024, which stood at IDR 876.64 trillion (14,52% of the total outstanding).

The Fed is expected to cut interest rates twice, totalling 50 basis points, in 2025, lowering the benchmark interest rate by a total of 100 basis points year-to-date. The U.S. economy remains on track for a soft landing, with growth projected at 2.5% year-on-year (YoY) in 2024 and 2.1% YoY in 2025. Similarly, Bank Indonesia is expected to implement an expansionary monetary policy in 2024, which is anticipated to positively impact Indonesia's economic growth. The bond market is likely to respond positively initially, driven by improving macroeconomic conditions, followed by strong performance in the JCI.

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