Today’s Outlook:
US MARKET: A glide in inflation which raised hopes of an interest rate cut early next year, ahead of the monetary policy decision being deliberated by the Federal Reserve scheduled for release on Thursday morning at 02.00 WIB.

The Labor Department’s Consumer Price Index (CPI) unexpectedly inched higher on a monthly basis in November, but edged lower on an annual basis, stoking concerns that inflation is taking longer to return to the Fed’s 2% target than many had hoped and raising the possibility that the central bank will keep policy rates in restrictive territory longer. Annual headline consumer price growth edged down to 3.1% last month, decelerating from 3.2% in October, according to data from the Bureau of Labor Statistics on Tuesday. Month-on-month, the reading inched up by 0.1%. Economists had forecast the measures at 3.1% and 0.0%, respectively. The closely-watched “core” figure, which strips out volatile items like food and energy, rose by 4.0% annually, in line with the prior month. On a monthly basis, underlying price gains came in at 0.3%, a marginally faster pace than 0.2% in October. Both matched estimates.

The Federal Open Markets Committee (FOMC) gathered for its two-day monetary policy meeting, which is expected to culminate in a decision to leave the Fed funds target rate at 5.25%-5.50%. The Fed is also expected to release its Summary Economic Projections and dot plot, which should shed light on the central bank’s path forward. Not surprisingly, treasury yields edged lower after the core CPI number landed largely in line with expectations, bolstering views that the Fed will hold its key policy rate steady on Wednesday. Benchmark 10-year notes last rose 8/32 in price to yield 4.2082%, from 4.239% late on Monday. The 30-year bond last rose 9/32 in price to yield 4.3151%, from 4.33% late on Monday. The dollar lost ground against a basket of world currencies in anticipation of the Fed’s updated economic and interest rate projections expected on Wednesday. The dollar index fell 0.26%, with the euro up 0.33% to USD1.0796.

COMMODITIES: Crude Oil WTI Futures, the U.S. benchmark, traded at USD68.83 a barrel following the report after settling down 3.8% at USD68.61 a barrel to remain on track for its longest weekly losing streak since 2018. U.S. crude inventories fell 2.3M barrels for the week ended Dec. 8, compared with a build of 549,000 barrels reported by the API for the previous week. Economists were expecting an decline of about 1.5M barrels. The larger-than-expected draw comes as concerns about growing non-OPEC supply offsetting recent output-cut pledges by OPEC and its allies, OPEC+ amid doubts about whether the cuts will be extended. The API data also showed that gasoline inventories increased by 5.8M barrels last week, while distillate stocks decreased by 300,000 barrels. The official government inventory report due Wednesday is expected to show weekly U.S. crude supplies decreased by about 1.5M barrels last week.

Meanwhile, Gold reversed its gains following the inflation data, and was last slightly lower. Spot gold dropped 0.1% to USD1,978.91 an ounce.

Corporate News
Adira Finance (ADMF) Has IDR 937 Billion Maturing Debt in Early 2024 PT Adira Dinamika Multi Finance Tbk has bonds maturing early next year. Based on data from the Indonesian Central Securities Depository (KSEI), the value of Adira Finance bonds that will mature in the first four months of 2024 reaches IDR 935.75 billion. The first bond will mature in January 2024 worth IDR 328 billion. The bonds, titled Adira Finance sustainable bonds IV phase IV 2019 series C, have a five-year term, where the bond listing date is January 24, 2019. When issuing the bonds, the issuer coded ADMF shares gave a fixed interest rate of 9.5% per year. Interest payments are made quarterly. In addition to these bonds, another series that will mature early next year is bonds with the title of sustainable bonds IV phase V in 2019 series C. These bonds were released on April 18, 2019 with a nominal value of IDR 607.75 billion. These bonds will mature on April 16, 2024. (Kontan)

Domestic Issue
Ministry of Finance: SUN Auction Interest Relatively Positive Ahead of Fed’s Decision The Directorate General of Financing and Risk Management of the Ministry of Finance stated that interest in the auction of Government Bonds (SUN) is relatively favorable ahead of the Fed, BoE, and ECB benchmark interest rate decisions scheduled for December 14, 2023 Indonesian time. “This is reflected in the high number of incoming bids of IDR 41.18 trillion or 2.17 times the indicative target that has been announced,” said DJPPR Director of Government Securities Deni Ridwan in Jakarta, Tuesday. In addition, Deni continued, the good performance of the state budget was also a positive supporting factor for yesterday’s auction. He said investor interest in the medium to long tenor SUN series was still strong. This is reflected in the number of bids on the 6 and 11 year SUN series which are still dominant, with the number of incoming bids amounting to IDR 20.52 trillion or 49.82 percent of the total incoming bids, and won IDR 11.6 trillion or 61.1 percent of the total awarded bids. Likewise, foreign investors’ interest in yesterday’s SUN auction is still solid with the number of incoming bids reaching IDR 9.08 trillion. The majority of incoming bids from foreign investors were in the 6-year SUN series amounting to IDR 5.13 trillion or 56.52 percent of the total incoming bids from foreign investors, and won IDR 2.3 trillion or 12.11 percent of the total awarded bids. Today’s SUN issuance auction is the last SUN auction for 2023 in accordance with the 2023 SBN issuance calendar. (Antara News)

US10YT is still in a downward trend with a PARALLEL CHANNEL pattern, as evidenced by the yield going back down after touching the upper channel resistance exactly at the high point of 4.253%. If the MA10 Support / yield of 4.214% cannot be maintained, then US10YT will slide back down towards the Support of the previous Low level on the yield: 4.10% – 4.06%. ADVISE: SELL ON STRENGTH; reduce position.

ID10YT was able to break above MA10 & MA20 Resistance, a feat that has never happened since the end of Oct. Next Resistance : yield 6.750% / 6.834% / 6.9485 / 7.00%. ADVISE : SPECULATIVE BUY; AVERAGE UP accordingly.

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