Although the September FFR increase of +75Bps has been Price In, investors are worried about the Fed’s FY22E interest rate hike to the level of 4.4% from the current 3.00%- 3.25%. This indicates that there will be a further increase in Hawkish FFR, or an increase of more than 50 bps in November and December. US economic recession indicators also occur in the UST2Y Vs Yield Inversion spread. The widening UST10Y is approaching 50Bps, with the current yield of UST10Y almost reaching the 4% level.
Corporate Bonds
SMGR: Owns 75.51% of SMBR’s Shares. PT Semen Indonesia Tbk (SMGR) will receive a 75.51% share ownership in PT Semen Baturaja Tbk (SMBR). The transfer will result in a change in SMBR’s status from a Persero to a limited liability company. However, the series A shares are still owned by the State as control as regulated in the company’s articles of association. (Emiten News)
Domestic Issue
2022 APBN Surplus IDR 107.4 Trillion. The 2022 State Revenue and Expenditure Budget (APBN) still prints a surplus until August 2022. The Minister of Finance stated that the APBN surplus in the reporting period was IDR 107.4 trillion or 0.58% of gross domestic product (GDP). The gains are not only seen in budget performance, the state treasurer said the primary balance until August 31, 2022 scored a surplus of IDR 342.1 trillion. In line with these conditions, budget financing decreased 46.0% YoY to IDR 286.8 trillion. (Kontan)
Recommendation
Investors are watching inflation in September which penetrated 1%. Based on a Bloomberg survey, Indonesia for the September MoM period is projected to record an inflation rate of +1.1% (Vs. Aug. deflation -0.21%). In addition to fuel and transportation within the city, investors are looking at the increase in rice prices as one of the contributors to inflation in September 2022. Today, the government is again offering FR95, FR96, FR98, FR97 and FR89 at the last SUN auction 3Q22.
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