Several mixed market sentiments, one of which came from the Federal Reserve officials on Wednesday adding to the cautious mood, stated that more interest rates rises are in the cards as the US central bank moves ahead with efforts to control inflation. The market expects two more 25 bps rate hikes by the middle of this year; with the Fed’s target to peak at 5.132% in July, and that by December it will have declined to 4.813%. Treasury yields held near one-month highs as investors adjusted for the likelihood that the Fed will hike rates further than previously expected. The yield on 10-year Treasury notes fell 5.3 basis points to 3.621%, while those on two year notes lost 4.2 basis points to 4.429%. Thus, the Treasury yield curve expanded to -81.2 bps. Twoyear German yields, the most sensitive to any shifts in expectations for interest rates and inflation, rose by as much as 11 basis points to 2.725%; the highest level since last January 3. Gold prices edged up 0.5% to USD1,875.4 an ounce in a volatile trading session, tracking a pullback in the dollar, while investors looked forward to more economic data, which are: Germany CPI (Jan.) and US Initial Jobless Claims.
Corporate News
KAI Pays Bond and Sukuk Interest of IDR38.30 Billion. State-owned transportation company PT Kereta Api Indonesia (Persero) reported that it had paid the interest of Kereta Api Indonesia Sustainable Bonds I Phase I Year 2022 Series A-B and Kereta Api Sustainable Sukuk Ijarah I Phase I Year 2022 Second, Series A-B, amounted IDR38.309 billion. Additionally, the bond proceeds will be used for the Refinancing Bonds I Year 2017 Series A, developing coal transportation in southern Sumatra, and procuring Adi Soemarmo International Airport Train facilities. (Emiten News)
Domestic Issue
Saving Bond Retail (SBR), series SBR012 sold well, with SBR012-T2 sales reaching IDR16.13 trillion, while SBR012-T4 sales reaching IDR5.3 trillion. In total, sales of both series reached IDR21.43 trillion. The offering period for this year’s inaugural Government Securities only lasts until this Thursday at 10:00 WIB. The positive sales are supported by the safe nature of SBN and the attractive nature of its floating with floor coupon, aka floating with a minimum limit that refers to the BI 7-Day Reverse Repo Rate. (KONTAN)
Recommendation
ID10YT yield breaks Parallel Channel – downtrend, thus, the yield has the potential to move up towards TARGET: 6.83 (MA50) / 7.0 / 7.06 / 7.20 / 7.262. ADVISE: Average Up accordingly. Following the same path, the US10YT yield is also on-the-way to the upside TARGET of the DOUBLE BOTTOM bullish reversal pattern at around 3,774. It is expected that MA50 will be able to perform well as the nearest Support at 3,585 level. ADVISE: Average Up above 3.70; or Buy on Weakness at MA10 / 3.55 Support.
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