Jakarta, CNBC Indonesia – Inflation in the United States (US) has the potential to soar again in the March 2022 period. Global investors are currently anxiously awaiting the release of the data.
On Tuesday morning US time or Wednesday evening Indonesian time, the US Department of Labor will release inflation data for the period March 2022.
Collected market consensus Reuters estimates US inflation last month to reach 8.5% compared to the same period in 2021 (year-on-year/yoy). If the consensus is realized, it will be the highest since 1981.
When inflation rises, the US central bank (Federal Reserve/The Fed) will be more aggressive in tightening monetary policy, either raising its benchmark interest rate or reducing its interest rate. balance sheet-nya.
Collected market consensus Reuters expect Fed Chair Jerome Powell and his colleagues to boost the Federal Funds Rate by 2.5 percentage points this year. If realized, it would be the first since 1994.
“With statements from Fed officials and inflationary pressures becoming more pronounced, we expect the Fed to raise interest rates by 50 basis points in May, June and July,” said James Knightly, Chief International Economist at ING. from Reuters.
If inflation continues to rise and the Fed becomes more aggressive in determining its monetary policy, the yield (yield) US government bonds will continue to rise and rise.
Today at 01:55 WIB, yield The 10-year Treasury was at 2.7801%. This level is the highest on record since early 2019.
Ascension yield made the government bond market of Uncle Sam’s country very ‘sexy’. As a result, the flow of funds flowing into the stock market becomes sluggish.
Yield High Treasury be a ‘sweetener’ for investors to enter the US government bond market. As a result, the financial markets of developing countries will again be abandoned by foreign investors, including Indonesia.
Remember, foreign investors still play a role in Mother Earth’s financial markets. In the stock market, the value of trading by foreign investors from 2022 to April 11 is IDR 311.4 trillion. That figure reached 32% of the total trade value.
From the beginning of the year until noon today, foreigners still recorded net purchases (net buy) of IDR 39.25 trillion in all markets.
In the government bond market, aka State Securities (SBN), the total ownership by foreign investors as of April 11, 2022 is IDR 854.93 trillion. The amount is equivalent to 17.68% of the total SBN traded.
However, the Directorate General of Financing and Risk Management (DJPPR) of the Ministry of Finance noted that from the beginning of the year to April 11, the SBN market still recorded outflow amounting to Rp 36.41 trillion.
Indeed, the stock market and SBN have been dominated by local players. However, the portion of foreign players is not something that can be underestimated.
If foreign investors leave and choose to anchor in the US government bond market, the impact will be felt. Especially if they go out together alias sudden reversal.
If this happens, the archipelago’s financial market will undoubtedly be shaken by a great ‘earthquake’. JCI and the rupiah are very likely to re-enter the red zone. Meanwhile, the SBN market will lose its way, even though yieldIt also has the potential to increase.
CNBC INDONESIA RESEARCH TEAM
(chd / vap)
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