Today’s Outlook:
US MARKETS: Positive market sentiment came from a trio of Federal Reserve policymakers who indicated on Thursday that they were more confident inflation was cooling enough to lower interest rates. Their comments – along with a larger-than-expected drop in US jobless claims data – have helped convince investors to support the stock market recovery. Investors are expected to focus heavily on looking for fresh evidence of a possible soft landing for the American economy in the US CPI and Retail Sales readings for July due later this week. A sign that the market has regained its composure, the CBOE Volatility Index, known as Wall Street’s ‘fear gauge’, fell 3.42 points on Friday to close at 20.37, a far cry from Monday’s intraday panic spike to 65.73, the equivalent of the starting point of the March 2020 Covid Pandemic. Meanwhile, MSCI’s index of worldwide stocks rose 0.69% to 787.16 but was virtually unchanged for the week, edging down just 0.01%.
CURRENCY & FIXED INCOME: The DOLLAR INDEX, which measures the greenback’s strength against a basket of currencies including the Yen and Euro, fell 0.12% to 103.16. Against the Japanese Yen, the Dollar weakened 0.42% to 146.66. The Euro was down 0.03% at USD 1.0915. In US Treasuries, yields fell after a volatile week while investors eye next week’s key inflation data for fresh clues on a potential September rate cut. The 10-year US Treasury yield fell 5.7 bps to 3.94%, from 3.997% at the end of Thursday. The 30-year US Treasury yield fell 6.5 bps to 4.2205% from 4.286%. The 2-year yield, which usually moves in line with interest rate expectations, rose 0.9 bps to 4.0531%, from 4.044% at the end of Thursday.
COMMODITIES: OIL prices closed higher as fears of widespread MIDDLE EAST CONFLICT persisted, where US WTI gained 0.85% and ended at USD 76.84/barrel while BRENT rose to USD 79.66/barrel, appreciating 0.63% for Friday.
GOLD prices firmed slightly, with spot gold up 0.12% to USD 2,429.60/ounce. Wells Fargo data noted that CHINA gold ETFs have surged, with holdings increasing by 92% since the beginning of 2023. The bank said the surge in gold-based ETF investments reflects strong demand from Chinese investors seeking safety amid economic uncertainty. Wells Fargo highlighted that Asian gold ETFs have grown 56% since January 2023 with 92% of the increase contributed from Chinese positions. This surge in gold holdings coincides with gold investment returns of 23% over the same period.
Corporate News
APLN: Moody’s Upgrades Agung Podomoro’s Rating to Stable
PT Agung Podomoro Land Tbk (APLN) received a corporate family rating (CFR) upgrade from Moody’s Ratings. In an announcement released on August 8, 2024, Moody’s raised APLN’s rating from Caa3 to Caa1, and revised the company’s outlook to stable from negative. This rating upgrade reflects two main factors. First, the reduced refinancing risk for APLN after the company successfully paid off the remaining USD 131.96 million bonds due on June 3, 2024. (Emiten News)
Domestic Issue
OJK Issues Rules to Support the Issuance of Regional Bonds and Sukuk
The Financial Services Authority (OJK) has issued OJK Regulation Number 10 of 2024 concerning the Issuance and Reporting of Regional Bonds and Regional Sukuk (POJK 10/2024) to expand local government fiscal financing sources through the utilization of funding sources in the capital market. “This POJK is also issued with the aim of improving information disclosure and supervision of the issuance of regional bonds and sukuk,” said Head of OJK’s Department of Literacy, Financial Inclusion and Communication Aman Santosa in Jakarta, Sunday. POJK 10/2024 was issued to adjust and harmonize the provisions of the Financial Services Authority Regulations governing regional bonds and regional sukuk with Law Number 1 of 2022 concerning Financial Relations between the Central Government and Regional Governments and Government Regulation Number 1 of 2024 concerning Harmonization of National Fiscal Policy as laws and regulations issued as an effort to overcome obstacles to the issuance of regional bonds and regional sukuk. Aman said POJK 10/2024 replaces, combines and revokes the validity of three POJKs previously issued in 2017. The three POJKs are POJK Number 61/ POJK.04/2017 concerning Registration Statement Documents in the Context of Public Offerings of Regional Bonds and or Regional Sukuk, POJK Number 62/POJK.04/2017 concerning the Form and Content of Prospectus and Brief Prospectus in the Context of Public Offerings of Regional Bonds and or Regional Sukuk, and POJK Number 63/POJK.04/2017 concerning Reports and Announcements of Issuers of Regional Bonds and or Regional Sukuk. (Antara News)
Recommendation
US10YT in overall is still moving down in a PARALLEL CHANNEL pattern since the collapse of the April peak yield (4.74%). Therefore it can be predicted that the short-term target is towards the upper channel resistance in the range of 4.13% yield, but before that there are a number of minor resistances that need to be passed first: 3.990% – 4.0%/ 4.08%. ADVISE: anticipate a temporary weakening in price (in a price trend that is still considered uptrend).
Equally, ID10YT is undergoing a downtrend in a PARALLEL CHANNEL pattern so that it is currently at the Support of the previous Low in May, as well as the pull of the long-term trendline around the yield of 6.76% – 6.74%. The last candle was an Inverted Hammer, an indication of bullish reversal adding optimism for a technical rebound soon, especially when RSI has entered Oversold territory. ADVISE LINE: anticipate yield strengthening (= price weakness) with the following Resistance lines: 6.84%/ 6.90% – 6.92%.
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