Today’s Outlook:
US MARKETS: The US dollar and Treasury yields weakened slightly as investors await US inflation data this week and consider when the US central bank might start cutting interest rates. A New York Federal Reserve report said consumers expect lower inflation and weaker income and spending over the next few years.

US consumer price data for December, released on Thursday, is expected to show headline inflation rose 0.2% on the month, with an annual increase of 3.2%. However, before that the November US Trade Balance data will be released first later in the evening with market participants focusing their attention on Export & Import growth. Meanwhile, investors are looking forward to quarterly results from companies. Major banks including JPMorgan Chase are starting their next performance reporting period with financial results due on Friday.

The dollar fell 0.3% against the yen to 144.21, while the US dollar index, which tracks the greenback’s movement against a basket of other major trading partners’ currencies, was down 0.2% at 102.28. In afternoon trade, the benchmark 10-year Treasury yield fell three basis points (bps) to 4.011%.

COMMODITIES: OIL prices tumbled nearly 5% on Monday after Saudi Arabia cut Asian crude export prices to the lowest level in 27 months, adding to the current narrative that global demand remains weak. However, despite concerns over global economic activity, both benchmark prices had risen more than 2% last week on heightened geopolitical tensions in the Middle East following attacks by Yemeni Houthi militants on ships in the Red Sea, triggering security disruptions to shipping activity in the region. In the precious metals market, GOLD prices fell to the lowest level in three weeks aka slumping more than 1% in early trading.

EUROPE MARKETS: The European economic wheels are rolling more vigorously with the German Trade Balance (Nov) again posting a surplus of EUR 20.4bn on the back of record high November Export & Import growth above expectations at 3.7% mom and 1.9% mom respectively, bouncing back from negative territory in the previous month. German Factory Orders (Nov) also started to grow positively 0.3% mom, reversing the negative 03.8% in the previous month. The Eurozone will monitor the Unemployment Rate (Nov) tonight where it is expected to remain stuck at 6.5%.

ASIA MARKETS: Japan will report a number of economic data such as Household Spending (Nov) today, where it is estimated that Japanese household spending in Nov showed a downward trend from the previous month. Therefore, no wonder Tokyo CPI & Core CPI (Dec) are also forecasted to cool down to 2.4% yoy and 2.1% yoy respectively, down from the previous position in Nov.

INDONESIA: Indonesia’s Foreign Exchange Reserves increased to USD 146.4 billion in Dec 2023 from USD 138.1 billion in the previous month. The amount was the largest since September 2021, supported by tax and service revenues and government foreign loans. The central bank noted that the foreign exchange reserves are equivalent to 6.5 months of imports and government foreign debt payments. Foreign Net Buy in the past week accumulated IDR 2.87 trillion (all markets), all inflows put the Rupiah exchange rate at IDR 15539/USD.

Corporate News
Danareksa Issues IDR 3 Trillion Bonds, Pefindo Gives idAA Rating PT Pemeringkat Efek Indonesia (PEFINDO) assigned an “idAA” rating to the planned issuance of Bond VIII by PT Danareksa (Persero) with a maximum value of up to IDR 3.0 trillion. At the same time, PEFINDO also affirmed the “idAA” rating for Danareksa and Danareksa’s outstanding bonds. The outlook on the Company’s rating is “stable”. The ratings reflect the very strong support from the Indonesian Government for DNRK. The ratings are not affected by DNRK’s standalone credit profile, which reflects a diversified business profile, good financial flexibility, and below-average cash flow protection and liquidity. The rating could be raised if PEFINDO sees the possibility of stronger support from shareholders. This should also be followed by an expanded role or greater contribution to the government and to the respective sectors it covers. On the other hand, PEFINDO may downgrade the rating if there is a material reduction in support and commitment from the GoI. The rating may also be downgraded if Danareksa experiences significant deterioration in its financial indicators, without any indication of strong support from shareholders. (Emiten News)

Domestic Issue
Government to Issue Retail SBN 8 Times in 2024 The government through the Directorate General of Financing and Risk Management (DJPPR) of the Ministry of Finance will issue 8 retail Government Securities (SBN) for 2024. The closest schedule is the issuance of ORI025 on January 29, 2024 to February 22, 2024. Then, SR020 on March 4 – March 27, 2024, ST012 on April 26 – May 29, 2024, SBR013 on June 10 – July 4, 2024, SWR005 on April 26 – July 17, 2024, SR021 on August 23 – September 18, 2024, ORI026 on September 30 – October 24, 2024, and ST013 on November 8 – December 4, 2024. Director of Government Bonds (SUN) of the Ministry of Finance’s DJPPR Deni Ridwan said that the retail SBNs to be issued have various features. For example, retail SBNs with conventional or sharia formats, tradable or non-tradable, and with a choice of 2-6 year tenors. From the 8 retail SBN issuances, the Ministry of Finance is targeting to obtain fresh funds of IDR 100 trillion-IDR 160 trillion. The maximum target is higher than the target of obtaining funds from the issuance of retail SBN in 2023 which amounted to IDR 130 trillion. Then, for the yield offered, of course, it will refer to a reasonable yield or yield in the market. The Ministry of Finance will consider attractive returns for investors and fair enough for the government as the issuer. (Kontan)

US10YT appears to be pulling back momentarily testing the MA10 & MA20 Support which has been goldencrossed around 3.93- 3.94% yield. Basically US10YT has an upside Target to around 4.221-4.58% yield as soon as the psychological 4.0% yield level is broken. ADVISE: BUY ON WEAKNESS.

ID10YT made a MA50 breakout, thus increasing the chances of ID10YT’s yield rising towards its Target of 6.95-6.96%. ADVISE: BUY, or Average Up accordingly.

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