Global News
- The US’s annual inflation rate increased to 1.4% in December of 2020, from 1.2% in November and slightly higher than market forecasts of 1.3%. On a monthly basis, consumer prices increased 0.4%, higher than 0.2% in November and in line with expectations, mainly driven by an 8.4% increase in the gasoline index, which accounted for more than 60% of the overall rise. (Trading Economics)
- US core consumer prices, which exclude volatile items such as food and energy, rose +1.6% yoy in December 2020, the same pace as in the previous month. (Trading Economics)
Domestic News
- Retail sales in Indonesia slumped by 16.3% year-on-year in November 2020, after plunging by 14.9% a month earlier. This marked the twelfth straight month of fall in retail trade, and the steepest pace since June, amid the prolonged impact caused by the COVID-19 crisis that made people stay at home most of their time. (Tradingeconomics)
- China would import more Indonesian products and increase investment in Southeast Asia’s largest economy, a top Chinese diplomat said on Wednesday, as Jakarta urged Beijing to remove barriers to make trade between the two countries more balanced. (Kontan)
- The government has determined that it will provide a corporate stage tax (PPh) discount of 100% of the amount of tax stated for business activities in the Special Economic Zone (KEK) area. (Kontan)
- The realization of the 2020 State Budget (APBN) deficit reached 6.09% of gross domestic product (GDP). (Kontan)
The rupiah exchange rate is estimated to strengthen to IDR 14,100 per USD. The dollar index was steady at 90.2 last night. Meanwhile, the 10-year UST yield fell -5 bps to 1.08%. Long-maturity Treasury yields dropped on Wednesday as investors digested the latest inflation data that showed a small increase. The Fed’s policy to continue helping the US economy by continuing the UST purchase program is likely to push the dollar index down. In addition, the rupiah will likely be boosted by a December trade balance surplus of 2 billion US dollars.