Today’s Outlook:

ECONOMIC INDICATORS: Earlier, data from ADP Employment Change showed employment in the US private sector increased more than estimated in April, while data for the previous month was revised higher. However, a separate report from the Bureau of Labor Statistics on JOLTs (Job Openings and Labor Turnover Survey) showed job openings in the US fell to the lowest level in three years in March, while the number of people quitting their jobs declined, which is an indication of a reduced labor pool that could potentially help the Fed in its fight against Inflation. Other data from the Institute for Supply Management showed continued sluggishness in the US manufacturing sector, which contracted in April amid falling orders after having expanded the previous month. All of these data come ahead of Friday’s main government employment report (Nonfarm Payrolls). Markets have reduced expectations regarding the timing and number of rate cuts by the central bank this year, as Inflation proves to be stable and the labor market remains on a strong footing. Bank of America maintains their view that the first rate cut will occur in December on the premise that Inflation will still be high and difficult to fall. They also considered the possibility of interest rates rising still quite high, although Powell had expressed that there was little probability of that happening. MSCI’s worldwide stock index fell 0.94 points, or 0.12%, to 755.67. Investors were also treated to a flood of Q1 earnings reports from US companies, with up around 3% after its quarterly results, which served to prop up the Dow Jones as a whole.

The DOLLAR index was down 0.21% at 106.10, following the Fed’s statement, having earlier reached 106.49, the highest since April 16; with the Euro gaining 0.22% at USD 1.0688. The yield on the benchmark US 10-year note fell 5.2 basis points to 4.632%, from 4.684% at the end of Tuesday; while the yield on the 2-year note, which typically moves with interest rate expectations, fell 4.8 basis points to 4.9977%. European bond markets were closed for the May 1 holiday, as were most stock markets in Europe and in China, Hong Kong, and most of Asia. Of the traded stock markets, the UK FTSE ended down 0.28%, and Japan’s Nikkei closed down 0.34%.

COMMODITIES: OIL prices fell for a third day on rising hopes for a ceasefire agreement in the Middle East and continued declines after the surprise report on US oil stockpiles by the EIA, which jumped by 7.3 million barrels in the week ended April 26, well above Reuters polled analysts’ forecasts where they predicted a 1.1 million barrel decline. Each of the benchmark prices fell more than 3% to a 7-week low. US WTI crude oil slid 3.54% to USD 79.03/barrel and BRENT fell to USD 83.49/barrel, dropping 3.29%.

Corporate News
BNI Conveys Steps to Deal with Global Geopolitics and Interest Rate Hikes. President Director of PT Bank Negara Indonesia or BNI (Persero), Royke Tumilaar revealed the company’s steps in dealing with global geopolitical developments, exchange rates, inflationary pressures, and interest rates. “With optimism for Indonesia’s macroeconomic conditions which remain healthy and stable, BNI believes that the steps that have been taken will continue to support BNI’s business growth in a sustainable manner,” Royke said in an online press conference exposing BNI’s first quarter 2024 performance on Monday, April 29, 2024. He said, BNI had taken prudent and strategic steps in managing liquidity conditions. Especially foreign currency funding through the collection of third party funds (DPK) with efficient policies. On April 5, 2024, BNI has issued global bonds worth USD 500 million or around IDR 7.95 trillion. The issuance of global bonds with a 5-year tenor, said Royke, received a positive response from global investors. This is indicated by the excess demand of up to 6.4 times the planned value issued. “The high confidence of global investors has enabled BNI to reduce the bond yield to only 5.3 percent.” Royke said that BNI obtained an optimal price because the global bond issuance was carried out before fluctuations in the USD exchange rate against the rupiah occurred. This step aims to manage the risk of exchange rate fluctuations and lock in some of BNI’s foreign exchange funding needs. (Tempo)

Domestic Issue
Good News for Indonesia! Foreign Interest in SUN Auction Increases Four Times Higher. Foreign interest in the auction of Government Securities (SUN), last Tuesday (30/4/2024), skyrocketed four times to more than IDR 8 trillion. Through the Bank Indonesia (BI) auction system, the government has conducted an auction of Rupiah-denominated SUN to fulfill part of the financing target in the 2024 State Budget. There were seven series auctioned, namely SPN03240801 (new issuance), SPN12250502 (new issuance), FR0101 (reopening), FR0100 (reopening), FR0098 (reopening), FR0097 (reopening) and FR0102 (reopening). Incoming bids that entered the auction this time shot up to 55.24% reaching IDR 50.19 trillion. However, only IDR 21.5 trillion was absorbed, this value being the lowest since the beginning of the year. Even so, the government absorbed a hefty foreign portion of up to IDR 4.30 trillion. This value is up 69.29% compared to the auction a month ago. Incoming foreign interest also skyrocketed fourfold, from IDR 2.93 trillion to IDR 8.81 trillion. Examining further into foreign interest, in this auction foreigners did not look at short-term one-year tenor bonds at all, for three-month tenors, foreign interest also only entered IDR 700 billion. (CNBC Indonesia)


US10YT is still trying to dwell around the previous High level of 4.70% yield, although now it has appeared to test the MA10 & MA20 Support around the yield range: 4.644% – 4.60%. A break below that level will drag the yield down further to the following Support: yield 4.50%, or the lower channel area around 4.40%. ADVISE : prepare to reduce position, set your TRAILING STOP.

ID10YT is trying to hold its 6-month high around the 7.3% yield level. RSI that has entered the Overbought territory is not a reason to stop the bullishness on SBN yield, which is quite far from the first Support which is MA10 / yield 7.10%. It seems that ID10YT yield above 7.0% will be the new normal for some time. ADVISE: set your TRAILING STOP.

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