Today’s Outlook:
In Wednesday’s trading (02/10/24), the US Dollar strengthened while oil prices trimmed previous gains as investors digested US economic data and anxiously awaited Israel’s response to Iran’s missile attack the day before. US President Joe Biden stated he would not support an Israeli attack on Iran’s nuclear sites and urged Israel to act “proportionally” in response to Iran’s largest direct attack on Israel, though the US also mentioned there would be “severe consequences” for Tehran’s actions. After firing ballistic missiles at Israel on Tuesday, Iran announced on Wednesday morning that its attacks had ended unless further provocation occurred. Israeli Prime Minister Benjamin Netanyahu promised to retaliate against Tehran’s airstrikes, stating in a statement that Iran “made a grave mistake” and “will pay for it.”
ECONOMIC INDICATORS:
– The ADP NONFARM EMPLOYMENT CHANGE reported that US private payrolls increased by 143,000 in September, exceeding expectations of 124,000 and the August figure of 103,000, indicating underlying strength in the economy. Richmond Fed President Barkin stated on Wednesday that the Fed’s policy outlook for the remainder of 2024 includes a potential cut of 50 basis points. With only two meetings left this year, the chances continue to favor a 25 basis point rate cut at the November FOMC Meeting, according to Investing.com’s FFR survey.
– Later tonight at around 7:30 PM WIB, the weekly INITIAL JOBLESS CLAIMS data will be anticipated, followed by the S&P Global Composite PMI (Sept), which is more focused on the services sector, expected to remain resilient at 55.4. The ISM Non-Manufacturing PMI data will also follow and hopefully show that the US services sector remains solidly in the expansion territory.
– The EUROZONE recorded an Unemployment Rate (Aug) steady at 6.4%, in line with expectations and unchanged from the previous month. Amid China and South Korea enjoying National Day holidays, JAPAN released Services PMI data from au Jibun Bank Japan this morning, which remained stable in the expansion zone despite showing slight weakening. Following this, European countries will release their Composite & Services PMIs, including GERMANY, the EUROZONE, and the UK, with averages predicted to show contraction.
COMMODITIES: Oil prices rose due to concerns that further escalation in the MIDDLE EAST CONFLICT could threaten oil supplies from the region, a major oil-producing area; however, price increases were capped by a significant rise in US crude oil inventories. A strike involving 45,000 dockworkers halting shipments at East Coast and Gulf Coast ports in the US entered its second day on Wednesday, with no scheduled negotiations between both parties, according to Reuters sources. In the energy market, US WTI closed up 0.39% at USD 70.10 per barrel, and BRENT ended the session at USD 73.90 per barrel, up 0.46%. In precious metals, spot GOLD fell 0.14% to USD 2,659.22 per ounce.
CURRENCY & FIXED INCOME : The US DOLLAR reached a three-week high against the Euro after the ADP EMPLOYMENT CHANGE national employment report showed US private sector jobs increased more than expected in September, with this data released ahead of the highly anticipated NONFARM PAYROLL report on Friday. Yields on longer-term US government bonds rose after data indicated a stable labor market while investors monitored the conflict in the Middle East. Given the private payroll data, the bond market may not expect a 50 basis point rate cut at the next FOMC Meeting. The yield on the 10-year US TREASURY rose 4 basis points to 3.783%, up from 3.743% on Tuesday afternoon, while the yield on the 30-year US bond increased 4.9 basis points to 4.1299%. The yield on the 2-year bond, which typically moves in line with interest rate expectations, rose 1.4 basis points to 3.6352%, compared to 3.621% on Tuesday afternoon. In terms of currency observation, the DOLLAR INDEX (DXY), which measures the strength of the greenback against a basket of currencies including the Yen and Euro, rose 0.34% to 101.60. The Euro fell 0.16% to USD 1.1049 while the Dollar strengthened 2% against the Japanese Yen to 146.43.
Corporate News
MFIN: PEFINDO Assigns idAAA Rating for MFIN’s Maturing Bonds
PEFINDO assigned an idAAA rating to the IDR 350 billion Shelf Registration Bond IV Phase IV Series B issued by PT Mandala Multifinance Tbk (Mandala Finance) (IDX: MFIN), which will mature on December 3, 2024. In a PEFINDO release, Monday (30/9) stated, the rating period is valid from September 26, 2024 – December 03, 2024. Mandala Finance plans to pay off the bonds using internal funds, with a cash and cash equivalent position recorded at IDR 511.6 billion at the end of June 2024. It is known that Mandala Finance focuses on financing new and used motorbikes. (Pasar Dana)
Domestic Issue
Sri Mulyani Optimistic Indonesia’s Debt Rating Will Improve in 2025
Finance Minister Sri Mulyani Indrawati is optimistic that Indonesia’s credit rating can improve next year. This is by considering good fiscal and macroeconomic conditions and economic growth next year which is maintained. “We are optimistic that R&I will provide a rating increase next year, by looking at good fiscal and macroeconomic conditions, as well as the next government’s commitment to creating high and stable economic growth,” Ms Indrawati said in her official statement, Wednesday (2/10). Meanwhile, Rating and Investment Information, Inc (R&I) affirmed the Republic of Indonesia’s Sovereign Credit Rating (SCR) at BBB+, two levels above investment grade, with a positive outlook, on September 30, 2024. Previously reported by KONTAN, there are several benefits if Indonesia’s credit rating increases. Chief Economist of Bank Syariah Indonesia (BSI) Banjaran Surya Indrastomo assessed that an improved credit rating will help improve the investment climate and ultimately help Indonesia in realizing Advanced Indonesia 2045.
Recommendation
– US10YT High point yield yesterday right touched MA50 Resistance at a yield of 3.83%, although the Closing position took a step back to 3.789% but well above MA10 & MA20. It looks like the yield is in a more stable position to try to break the Resistance again in the next few days, moreover it will be triggered by US labor data which is the justification. POTENTIAL: the price will drop faster if the yield Resistance of 3.83% is exceeded, get ready to reduce positions.
– ID10YT has surpassed the first Resistance / MA10 which reversed its role to become the current support at 6.46% yield. The second challenge will be MA20 / yield 6.53%; which if successfully broken will stop ID10YT from the upward price trend so far; at least until the yield reaches MA50 Resistance / 6.66%.
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