Today’s Outlook:
The Dow and Nasdaq rose 1.4% and 3.2% respectively last week, posting their strongest weekly performance since July. The S&P 500 rose 2.5% for its best week since June after an increase in the Unemployment Rate to 3.8% (from 3.5%) in July, strengthened expectations of a pause in Fed Fund Rate hikes this month, while streaming company stocks plummeted due to a rate dispute between Disney and Charter Communications. The Labor Department report also showed; in addition to Wage growth slowing, Nonfarm Payrolls rose by more than forecast, although data for July was revised lower to 157,000 job additions. The data adds to recent macroeconomic evidence that the Federal Reserve is winning its fight against inflation, and reinforces expectations that the central bank is nearing the end of its interest rate hiking cycle. Market participants are pricing in a 93% chance that the Federal Reserve will keep interest rates unchanged at its meeting later this month, according to CME’s FedWatch tool. The US stock market will remain closed on Monday for the Labor Day holiday. Alternatively, investors/traders can monitor the German Trade Balance (July) data which is predicted to see the surplus drop slightly to EUR 18bn, from EUR 18.7bn in the previous month; as Exports of Europe’s strongest economy are forecast to drop to -1.5% mom from 0.1% micro growth in the previous month. So far Indonesia’s macroeconomic data has been quite supportive as August Inflation rate was published at 3.27%, below prediction of 3.33%, but indeed higher than the previous month at 3.08%. Meanwhile, the Manufacturing PMI (Aug.) proved to be able to expand further at 53.9 (from 53.0 the previous month).
Corporate News
Government Aims to Collect IDR 21 Trillion from Auction of Seven SUN Series on September 5 On September 5, 2023 tomorrow, the government will conduct an auction of rupiah-denominated Government Bonds (SUN). The indicative target ranges from IDR 14 trillion to IDR 21 trillion. According to information disclosed on the website of the Directorate General of Financing and Risk Management (DJPPR) of the Ministry of Finance, the purpose of the auction of the seven series of SUN is to fulfill part of the targets listed in the 2023 State Budget (APBN). (Warta Ekonomi)
Domestic Issue
Waskita (WSKT) Bondholders and Vendors Asked Not to File PKPU The Ministry of SOEs has appealed to bondholders and vendors not to file a postponement of debt payment obligations (PKPU) lawsuit against PT Waskita Karya (Persero) Tbk (WSKT). Deputy Minister of SOEs I Kartika Wirjoatmodjo stated that his party is committed to improving WSKT’s financial condition. This effort will be pursued by injecting state capital participation (PMN) through Hutama Karya. Currently, the ministry is still negotiating with bank creditors, most of whom are said to have approved Waskita’s master restructuring agreement (MRA) scheme. Therefore, he appealed to bondholders and vendors not to file a PKPU lawsuit so that the WSKT restructuring process would be completed soon. (Bisnis)
Recommendation
US10YT made an attempt to break MA10 & MA20 Resistance / yield 4.20%; racing against time where both Moving Averages have deadcrossed, indicating that the Uptrend is seriously threatened (although in the medium term US10YT is still moving up in a PARALLEL CHANNEL pattern). ADVISE: BUY ON BREAK; or AVERAGE UP accordingly. Or BUY ON WEAKNESS around MA50 support and lower channel around yield 4.032% – 4.00%.
ID10YT made an attempt to climb back above MA20 / 6.450% Resistance, yet we have to wait for the Closing position to be sure the break out is solid. The next resistance is MA10 at the yield level of 6,484% to make ID10YT undergo a short-term upward swing again. ADVISE: SPECULATIVE BUY; AVERAGE UP accordingly.
Download full report HERE.
