Indonesia’s central bank surprised with a first rate hike since Oct’23 with 7-day rate increased to 25bps to 6.25% (highest since 2016)
Jahnavi Prabhakar,
Economist,
Bank of Baroda
Mumbai, April 25, 2024: In the US, new orders for durable goods climbed up by 2.6% to US$ 283.4bn in Mar’24 from 0.7% in Feb’24 on a monthly basis, reflecting strength in the economy. New orders excluding defence climbed by 2.3% and orders excluding transportation were up by 0.2% in Mar’24. Investors will turn their focus towards US GDP and PCE data which is Fed’s preferred gauge of inflation and might shed some light on Fed’s trajectory on rate outlook. The rate cut possibility in Jun’24 has dwindled. Separately, Indonesia’s central bank surprised with a first rate hike since Oct’23 with 7-day rate increased to 25bps to 6.25% (highest since 2016). The objective was to strengthen the currency which has fallen to a 4-year low.
§ Barring Dow Jones and FTSE, other global indices ended higher. US indices ended lower with focus turning towards US GDP and PCE data. Nikkei extended its gains for the third day in a row as investors await outcome from the ongoing BoJ policy meet. Sensex continued to climb higher led by gains in metal and oil & gas stocks. However, it is trading lower today, in line with other Asian stocks.
Global currencies traded in thin ranges ahead of key US macro data. EUR, CNY and INR were little changed from their last close. On the other hand, JPY depreciated further by 0.3% to breach the 155/$ mark, intensifying expectations of a possible intervention by BoJ. INR is trading weaker today, while other Asian currencies are trading mixed.
Global yields ended higher. 10Y yield in Germany rose sharply by 9bps as Ifo’s business climate index rose more than expected. In US as well, 10Y yield rose as durables goods orders surprised positively. Following global cues, India’s 10Y yield also edged up by 2bps. Traders also await the g-sec auctions on Friday. It is trading flat at 7.19% today.
(The views expressed in this research note are personal views of the author(s) and do not necessarily reflect the views of Bank of Baroda. Nothing contained in this publication shall constitute or be deemed to constitute an offer to sell/ purchase or as an invitation or solicitation to do so for any securities of any entity.)
