US stocks closed mixed around the flat territory as market participants grappled with Federal Reserve Chairman Jerome Powell’s second comments from Capitol Hill, as well as a slew of economic data ahead of next week’s Labor & Inflation data; a bellwether for future interest and rate decisions. Powell reaffirmed his message from Tuesday, of the need to impose higher and potentially faster interest rate hikes, given the economic data released before this month’s FOMC Meeting. The Fed Funds Future recently started to factor in an 80% chance for the Fed to raise its rates by 50 bps. The US JOLTs Job Opening reported 10.842 million job openings in Jan., higher than the forecast of 10.5 million, although lower than the previous period of 11.234 million. Meanwhile, ADP Nonfarm Employment Change recorded an increase in private sector workers, rising by 242K during February (higher than the forecast: 200K & previous: 119K). This data could indicate employment data in the government sector (US Nonfarm Payroll) on Friday. From Europe, the Eurozone reported their 4Q22 GDP grew only 1.8% (lower than forecast & previous quarter).
The two-year US Treasury yields moved close to a 16-year high, while the 10-year benchmark bond price fell 1/32 in price to yield 3.9795%, from 3.975%. Moreover, the 30-year bond rose 3/32 in price to yield 3.8822%, from 3.888% a day earlier. The greenback was wavered close to the flatline against a basket of world currencies after touching a three-month high after Powell’s testimony. USD/IDR is at IDR 15,467/USD (source: RTI Business), which is a 2-month high & still likely to advance towards its TARGET of 15,587/USD. Domestically, the Consumer Confidence Index (Feb.) was reported to have edged down to 122.4, from 123 a month earlier. NHKSI RESEARCH predicts that the market will still move relatively volatile (or slow), welcoming the release of significant economic data today from the Asian continent (Japan GDP 4Q22 & China CPI Feb.) and the US (Initial Jobless Claims).
Corporate News
Focus on Refinancing, XL Axiata (EXCL) Plans to Issue Bonds Again in 2023 Telecommunications company PT XL Axiata Tbk (EXCL) plans to issue bonds this year. Director & Chief Finance Officer of XL Axiata Budi Pramantika said the corporate action was carried out to cover the maturing debt. As is known, the company has a debt of IDR 4.46 trillion due in 2023, IDR 1.01 trillion in 2024, and IDR 6.59 trillion in 2025. However, in December 2022, the debt due this year was repaid for IDR 2 trillion, which fund came from the rights issue. Thus, the remaining debt due in the third quarter of 2023 remains IDR 2.4 trillion. Later, the remaining debt will be repaid using a bond issuance scheme. (Bisnis)
Domestic Issue
If Credit Flows Profusely, Bankers are Preparing to Release Bonds in 2023 Non-third-party funding (DPK) by banks will be bustling in 2023. Since both regulators and bankers will project lending to rise 10% to 12% year on year (YoY) in 2023. Nevertheless, deposits are still the main source of funding. If liquidity gets tighter and credit demand is heavy, bankers have prepared funding from non-DPK. LPS sees the positive sentiment of banking profitability and capital performance throughout 2022 can be a driving factor for banks to increase access to the capital market. For example, PT Bank Negara Indonesia (Persero) Tbk will release debt securities this year. Bank BNI President Director Royke Tumilaar stated that the funding would be done if credit expansion could be even higher. Maybank Indonesia President Director Taswin Zakaria said he had plans to issue debt securities. However, Taswin said this corporate action would consider the demand for credit. (Kontan)
Recommendation
US10YT consolidates yield in Sideways area: 3.924-4.09 but in general the Uptrend is still safe above MA10 & MA20. This waiting gesture of market participants may be seen throughout this week and next week, moving volatile as economic data releases & FOMC Meeting decisions later. ADVISE: set your Trailing Stop, let your profit run.
ID10YT continues the Uptrend yield towards TARGET 7,189-7,202. Although the RSI indicator has entered the Overbought region, the Uptrend is still strong so it is not urgent to take profit. ADVISE: set your Trailing Stop, let your profit run.
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