Today’s Outlook:
All three major US indexes recorded a surge above 1% at their highest in 14 months, as investors cheered economic data that fueled bets that the US Federal Reserve is nearing the end of its aggressive interest-rate hike trend. Treasury bond yields slid after a slew of economic data pointed to easing inflation, helping offset worries about future rate hikes and boosting tech giants like Apple and Microsoft to record highs. As an information, so far in 2023, the S&P 500 is up about 15% and the Nasdaq has climbed about 32%, fueled by signs of economic resilience, a better-than-expected earnings reports, and bets that interest rates are near their peak.

From Europe, the European Central Bank raised interest rates for the eighth consecutive time, as expected by 25 bps to bring the deposit rate at 3.5% and borrowing cost at 4%. The ECB also signaled that there is still potential for further increases to combat Eurozone inflation which is still perched at 7%, to drop to the ECB’s target level of 2%. The Eurozone Inflation (May) report will be the market’s concern this afternoon at 4:00 PM GMT with consensus sloping to 6.1%.

The Central Statistics Agency (BPS) noted that Indonesia’s trade balance returned to a surplus in May 2023 amounting to USD 440 million. It was the 37th consecutive month of surplus, but the lowest amount since May 2020. The surplus fell from USD 2.90 billion in the same month of 2022, far below the market consensus of USD 3.02 billion. Nevertheless, Export & Import made a positive report card by rising significantly above expectation, by 1% and 14.35% yoy respectively. The increase in exports mostly came from non-oil & gas exports by +1.9% yoy (vs -30% yoy in Apr23), while the increase in imports came from all types of goods especially capital goods and consumer goods imports by +60% and +36.5% yoy (vs -7% and – 18% yoy in Apr 23). This fact indicates an increase in domestic economic activity and optimism for a higher business climate going forward.

Corporate News
Strengthen Business Expansion Funding Structure, BRI Finance Issues IDR 500 Billion Bonds PT BRI Multifinance Indonesia (BRI Finance), a subsidiary of PT Bank Rakyat Indonesia (Persero) Tbk (BBRI), or BRI strengthens its funding structure through the issuance of bonds to optimize performance, especially the expansion of the financing business in the consumer segment. BRI Finance is ready to hold a public offering of BRI Finance Bond II Year 2023 on June 30 – July 4, 2023 with a maximum fundraising of IDR 500 billion. The company plans to issue bonds in two series, namely Series A with a tenor of 370 calendar days with an offering coupon range of 5.75% – 6.35% and Series B with a tenor of three years with an offering coupon range of 6.35% – 7.00% from the date of issuance. (Emiten News)

Domestic Issue
Touching the Lowest Level, the Declining Yield Trend is Expected to Continue Based on data from the Indonesian Central Securities Depository (KSEI), the yield on 10 year benchmark Government Bonds (SUN) touched its lowest level. The downward trend in yields is expected to continue, although the movement is quite limited. Henan Putihrai Asset Management (HPAM) Head of Business Development Division Reza Fahmi projects that low yields in the Rupiah-denominated bond market will continue, amid strong investor interest in the domestic market. However, global uncertainty and volatility remain high. Quoting the Indonesian Securities Price Appraiser (PHEI), the yield on 10-year SUN is currently in the range of 6.2%. Reza observed that SUN yields moved in the range of 1-4 bps along the curve. The yield on the 10-year SUN fell 2 bps to 6.24%. (Kontan)

US10YT is still trying to maintain the Uptrend short term yield in the MA10 & MA20 Support range, as well as above the short term Trendline Support, precisely at a yield of 3.72%. ADVISE: BUY ON WEAKNESS; Average Up >3.743%. TARGET: 3.83-3.85% / 3.968-4.0%.

ID10YT weekly chart shows strong downtrend inside PARALLEL CHANNEL pattern (blue). Support from previous low is detected around yield: 6.144-.6.036%. Nearest Resistance: MA10 / yield 6.456%. ADVISE: HOLD; Wait & See.

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