Today’s Outlook:
In yesterday’s trading session, the first positive catalyst came from the steady 10-year US Treasury yield from a 16-year high after economic data showed business activity weakening in the US & Euro Zone region as illustrated by the US S&P Global Composite PMI which appeared stagnant in August at 50.4 (weaker than forecast & previous period at 52); the weakest growth since last February, as demand for new business in the rapidly growing service sector is now starting to contract. Similarly, in the Euro Zone, the PMI contraction in August unexpectedly widened by falling to 47 (the lowest since December 2020), unable to meet expectations of 48.5 which was not much different from 48.6 in July; due to weak service sector growth. The contraction in Composite PMI was also experienced by several countries in continental Europe such as France, Germany, UK; however, this was not the case in Japan which reported growth in both the manufacturing and services sectors au Jibun Bank Japan Manufacturing PMI for August recorded closer to the expansionary border at 49.7, while the Services PMI was firmly in expansionary territory at 54.3. Adding to the sentiment from the economic data, later in the evening the US reported Building Permits which came out almost in line with estimates at 1.443 million units; New Home Sales in July also experienced an above-expected increase of 714 thousand units and on a monthly basis rose quite massively by 4.4% mom. From the Asia, South Korea this morning released its July producer-level Inflation data which turned out to increase 0.3% on a monthly basis, but slipped -0.2% yoy on an annualized basis. Japan noted that foreign investment in their bond and stock markets experienced a significant decline. Further today, market participants await the central bank decisions from South Korea & Indonesia regarding interest rates which are both expected to hold their benchmark rates at 3.5% and 5.75% respectively. Later in the evening, there will be further economic data from the US, where Durable Goods Orders (July) are expected to drop -4% in July, contrasting with a 4.7% gain in June. Initial Jobless Claims will be an important benchmark on interest rate trends, whether it will be released as predicted at 240k, which should e slightly higher than last week’s final reading of 239k.
Corporate News
Astra Sedaya Finance Conveys Readiness to Pay Bond Coupons PT Astra Sedaya Finance (ASDF) will pay the interest coupon of the fourth Shelf Registration Bond V Sedaya Finance Phase IV Series B-C. As quoted from the disclosure of information, on Wednesday (23/8/2023), the subsidiary of PT Astra Internasional Tbk (ASII) stated that it had prepared funds of IDR 6.03 billion. ASDF will pay the bond coupon funds to shareholders through PT Kustodian Sentral Efek Indonesia (KSEI) which will be carried out on August 28, 2023. In detail, bonds with security code ASDF058CN5 or series B with an amount of IDR 373 billion have an interest coupon of 6.35% to IDR 5.92 billion. Meanwhile, bonds with securities code ASDF05CCN5 or series C with an amount of IDR 7 billion have an interest coupon of 6.5% to IDR 113.7 million. ( Bisnis )
Domestic Issue
The Plan to Issue Government Securities Jumps 83.6% in the 2024 Draft State Budget In the Draft State Budget (RAPBN) for fiscal year 2024, debt financing sourced from net Government Securities (SBN) is planned at IDR 666.4 trillion. The debt financing through the issuance of SBN increased by 83.6% when compared to the 2023 State Budget outlook of IDR 362.9 trillion. Quoting Book II of the Financial Note of the 2024 Draft State Budget, attempts to achieve the debt financing target through the issuance of SBN in 2024 will be carried out by prioritizing SBN instruments denominated in rupiah. Furthermore, the selection of instruments and tenors of issuance will consider several factors such as debt management policies, SBN issuance costs, domestic and global financial market risks, investor preferences, and market absorption capacity. (Kontan)
Recommendation
US10YT seems to start pulling back after holding its rise at the upper channel resistance around 4.366% yield; it even started to break the first MA10 Support. US10YT yield will look for the second Support at MA20 / 4.148%. ADVISE: Buy on Weakness as the trend pattern is still up.
ID10YT may have to pullback for a moment after closing the GAP in the 6.753% yield region; although in order to continue the bullish swing towards the TARGET yield of 7.0%, the result of the (bullish reversal) INVERTED HEAD & SHOULDERS pattern. ADVISE: Buy on Weakness around Support MA10 / 6.522% – 6.561%.
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