Today’s Outlook:
DDJIA and others struggled to stay around the border of positive territory on Tuesday trading (22/08 / 23) triggered by investors’ concerns that the Federal Reserve will keep interest rates higher for longer; plus the fall in banking stocks as a result of the credit rating downgrade by S&P on several US banks, causing the S&P 500 bank index to fall 2.4%. Investors hope for clarity on the US interest rate trend when Fed Chair Jerome Powell speaks at a meeting of central bankers on Friday in Jackson Hole, Wyoming symposium. The benchmark 10-year US Treasury yield has reacted early by touching a 16-year high amid predictions that the Fed will still maintain the upward trend of the Fed Fund Rate. Meanwhile, the 2-year US Treasury, which is more sensitive to interest rate movements, is currently at 5% yield which is the highest point since early July. Higher borrowing costs will suppress business and consumer spending, and ultimately lead to an economic slowdown. This seems to be evident as the US economic data just reported lower-than-expected Existing Home Sales (July) of 4.07 million units (vs. previous month’s 4.16 million units).
From the other side of the world, Japan released BOJ Core CPI at 3.3% yoy, heating up above estimates & previous period at 3%. The Eurozone announced the Current Account (June) which managed to record a massive surplus of EUR 35.8 billion, a sharp contrast to the estimated deficit and the previous month’s result of EUR 7.9 billion. As for today, the market will be presented with PMI data from several countries, before having more focus on economic data from the US in the evening, such as: Building Permits, S&P Global Composite PMI, New Home Sales, and also Crude Oil Inventories which are predicted to drop again by 2.299 million barrels, adding to the thin US oil reserves after minus 5.96 million barrels in the previous period.
Indonesia’s current account balance in Q2/2023 recorded a deficit of USD 7.4 billion and the position of Foreign Exchange Reserves at the end of June was still high at USD 137.5 billion. Bank Indonesia explained that the current account deficit is still manageable as the impact of high uncertainty in global financial markets, amidst the conditions of falling commodity prices and global economic slowdown and rising domestic demand.
Corporate News
Equal Treatment, Waskita Postpones Interest Payment of Shelf-Registered Bonds III Phase IV Year 2019 PT Waskita Karya (Persero) Tbk (stock code: WSKT) postponed the interest payment of the 15th, 16th, 17th Shelf-Registered Bonds III Phase IV Year 2019 Series B. The postponement is because Waskita is currently in the process of requesting an extension of time for the postponement of all obligations (standstill) for a while to the Banking Creditors to support the MRA review process comprehensively so that the principle of equal treatment applies to Bondholders. (Antara News)
Domestic Issue
Government Receives IDR 7.8 T from Auction of 7 Series of Government Securities The government managed to raise IDR 7.87 trillion from the auction of seven series of Government Securities (SUN), last Tuesday. The total incoming bid reached IDR 34.60 trillion. Based on an official statement from the Directorate General of Financing and Risk Management of the Ministry of Finance (DJPPR Kemenkeu), Tuesday (22/8), there were seven series of SUN auctioned, namely SPN03231122 (new issuance), SPN12240822 (new issuance), FR0095 (reopening), FR0100 (new issuance), FR0098 (reopening), FR0097 (reopening) and FR0089 (reopening) through the Bank Indonesia auction system. Furthermore, Director of SUN at the Ministry of Finance Deni Ridwan revealed, ahead of today’s SUN auction, the market moved volatile due to the credit rating downgrade of several banks in the US. (Kumparan)
Recommendation
US10YT hold its rise right at the upper channel resistance at around 4.366% yield; thanks to the clue from the leading indicator RSI negative divergence. ADVISE : anticipate trend reversal; Sell on Strength, or set your Trailing Stop. Nearest Support: MA10 / yield 4.246%.
ID10YT continues to skyrocket towards the TARGET yield of 7.0%, the result of the (bullish reversal) INVERTED HEAD & SHOULDERS pattern, after completing the task of closing the GAP in the 6.753% yield region. ADVISE: Average Up accordingly, let your profit run.
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