US stock indexes closed higher on Thursday (30/03/23) as the rise in Treasury bond yields subsided after the release of Initial Jobless Claims data came in higher than expected at 198,000 (also higher than 191,000 in the previous week). Looking at this reading, economists expect higher claims to return in the second quarter of this year; thus, reigniting optimism that inflationary pressures are easing and could be a reason for the Federal Reserve to end the upward trend in benchmark interest rates soon. Additionally, President Joe Biden called on regulators to step up oversight on banks, urging them to reinstate rules that were rolled back by the Trump administration, following the collapse of Silicon Valley Bank and Signature Bank.
The benchmark of the 10-year US Treasury yield edged down by 1.7bps to 3.549% from 3.566% on Wednesday. While the 30-year tenor fell 3.8bps to 3.74% from 3.778%; however, the 2-year tenor rose 3.1bps to 4.113% yield. As for the US Dollar, it slipped to a week low over the Euro, as German Inflation (Mar.) successfully eased to 7.4% YoY from 8.7% the previous month, although concerns on monthly Inflation growth remained unmoved at 0.8% MoM, the same as the Feb figure. On the other hand, dollar consolidation & bond yields successfully lifted Gold prices 0.9% to 1981.62/ounce. Today a slew of macroeconomic data from the East and West will be awaited, including: Tokyo Inflation (Mar.), Chinese Composite PMI (Mar.), UK 4Q22 GDP, German Retail Sales (Feb.) & Unemployment Change (Mar.), Eurozone CPI (Mar.); and to cap it off tonight from 19.30 local time, the US Personal Consumption Expenditure (PCE) Price Index data is announced; which is a specific inflation indicator for the public consumption sector (excluding food and energy prices), followed by Personal Spending (Feb.) and Michigan Consumer Expectations & Sentiment (Mar.).
Corporate News
WOM Finance Open Opportunities to Issue More Bonds at the End of the Year After last week PT Wahana Ottomitra Multiartha Tbk (WOM Finance) issued bonds worth Rp 1 trillion, the company will still issue bonds this year. The funding is to realize WOM Finance’s target to disburse IDR 5.4 trillion in loans this year. Therefore, there is a need for funds of around IDR 4 trillion. At the beginning of this year, WOM Finance’s Finance Director Cincin Lisa saw that bond interest is cheaper. Therefore, became the reason why WOM Finance issued bonds last week. (Kontan)
Domestic Issue
Minister of Finance Observes Market Situation before Issuing Green Bonds in 2023 Minister of Finance Sri Mulyani will observe the market situation and its development first before issuing special bonds such as green or sustainable bonds in 2023. This is because Indonesia and the world are realizing that there is a very steep increase in inflation and interest rates. Thus, the financing strategy for Indonesia will continue to be very opportunistic and pragmatic. She said Indonesia issued its first sustainable bond in 2021 and got the cheapest price, especially in Europe at that time. In addition to the market situation, Sri Mulyani said the government would look at the country’s cash flow before issuing green bonds. (Antara News)
Recommendation
US10YT is relatively Sideways, yet to budge from between the Support and Resistance yield ranges: 3.511% – 3.618%. The direction of the breakout will determine the next movement of US10YT. ADVISE: Average Up accordingly. ID10YT will prove its ability to face MA10 Resistance/yield 6.868% as the nearest Resistance at the moment. Following MA20/6.898% yield up to the psychological level of 7.0% as the next obstacle that determines whether it can again smoothly continue this short term uptrend; towards the TARGET which is actually still waiting around the 7.057% / 7.189-7.202% yield. ADVISE: Average Up accordingly.
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