US Market: US Consumer Price Index Increased by The Most in 14 Months in August

Today’s Outlook:
US Market: US Consumer Price Index increased by the most in 14 months in August as the cost of gasoline rose, but the annual rise in Core CPI was the smallest in nearly two years. The US central bank is still widely projected to keep interest rate at a range of 5.25% to 5.50% at next week’s FOMC Meeting, according to Investing.com’s Fed Rate Monitor Tool and CME FedWatch Tool surveys. Traders estimate there is a 97% chance for the Federal Reserve to keep rates in place on September 20 and a nearly 67% chance for a further pause in November. Given that Core Inflation has cooled below expectations, creating uncertainty over whether the Federal Reserve will opt to raise rates once more in either November or December. Meanwhile, Inflation data at the producer level has also been released with a rise of 1.6% yoy in August, exceeding the estimate of 1.2%; and on a monthly basis, the PPI rose 0.7% mom, above the estimate of 0.4%. Closing the week, the US economic data will be released later tonight, namely: Industrial & Manufacturing Production (Aug.); and Michigan Consumer Expectations & Sentiment (Sept.) on how the University of Michigan views current consumer expectations and the business climate outlook for the next 6 months.

European Markets: The European Central Bank has raised interest rates for the 10th consecutive time, to the highest level in history after policymakers saw that inflation was still too high for the Eurozone region, amid the fact that the region’s economic growth was also weakening. The Frankfurt-based ECB raised its benchmark interest rate by 25 bps to 4.5%, with marginal lending facility and deposit facility rates at 4.75% and 4.0% respectively. The ECB is still focused on lowering Inflation to their target level of 2%, given the fact that Eurozone Inflation is currently 2x higher than the target.

Asian Markets: Japan has announced Industrial Production in July which still grew negatively but the decline has started to slow down from before, even smaller than expected. China launched a stimulus move where China’s central bank said on Thursday (14/09/23) that it will cut the reserve requirement ratio (RRR) or the amount of cash that banks must hold in reserve; for the second time this year to help maintain adequate liquidity while supporting the economic recovery. The Peoples Bank of China (PBOC) said it will cut the RRR for all banks, except those that have implemented a 5% reserve ratio, by 25 basis points starting September 15. The move comes after the world’s second-largest economy struggled with economic recovery after the pandemic. To support the economy, the government has launched a series of policy measures in recent months, including measures to boost housing demand.

Commodities: West Texas Intermediate (WTI) Oil prices have entered the USD90/barrel level and are steadily approaching the 10-month high of USD93.74/barrel in November 2022. Crude Oil prices have surged 30% since the end of June, as demand in the US & China began to increase amid production cuts from Saudi Arabia & Russia.

Corporate News
Merdeka Gold (MDKA) Repays IDR 1.49 Trillion Bonds, Here’s the Source of Funding Merdeka Copper Gold (MDKA) paid off bonds worth IDR 1.49 trillion. It consists of bond principal amounting to IDR 1.47 trillion. Then, the 4th interest on debt securities amounted to IDR 21.82 billion. Principal repayment, and the fourth interest payment of Merdeka Copper Gold Phase III Sustainable Bonds Year 2022 series A have been submitted to bondholders. The deposit was made on September 8, 2023 at the Indonesian Central Securities Depository (KSEI) as the paying agent. The repayment was made, in line with the maturity of Merdeka Copper Gold Phase III Year 2022 series A sustainable bonds on September 8, 2023. (Emiten News).

Corporate News
Merdeka Gold (MDKA) Repays IDR 1.49 Trillion Bonds, Here’s the Source of Funding Merdeka Copper Gold (MDKA) paid off bonds worth IDR 1.49 trillion. It consists of bond principal amounting to IDR 1.47 trillion. Then, the 4th interest on debt securities amounted to IDR 21.82 billion. Principal repayment, and the fourth interest payment of Merdeka Copper Gold Phase III Sustainable Bonds Year 2022 series A have been submitted to bondholders. The deposit was made on September 8, 2023 at the Indonesian Central Securities Depository (KSEI) as the paying agent. The repayment was made, in line with the maturity of Merdeka Copper Gold Phase III Year 2022 series A sustainable bonds on September 8, 2023. (Emiten News)

Domestic Issue
The Government Will Auction State Bonds Next Week, Aiming for IDR 21 Trillion The government will conduct an auction of Rupiah-denominated Government Bonds (SUN) to fulfill part of the financing target in the 2023 State Budget. The SUN auction will be held on Tuesday, September 19, 2023 and settlement on Thursday, September 21, 2023 with an indicative target of IDR 14 trillion and a maximum target of IDR 21 trillion. (Suara)

Recommendation
US10YT is trying to form a strong base at MA10 & MA20 Support in the medium term uptrend within the PARALLEL CHANNEL pattern. As long as the yield is still held above 4.281%, the bullish swing can still continue towards the TARGET: 4.53%. ADVISE: AVERAGE UP when the yield resistance of 4.366% has been broken.

ID10YT may indeed have to pullback first after hitting Resistance from the previous High level which is quite powerful at a yield of 6.692% – 6.748%. ADVISE: SELL ON STRENGTH (gradually). Gap has the potential to close and become Support around 6.65% / 6.595% yield (by that time MA10 has also risen higher, both serve as Support in that area).

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