Today’s Outlook:
US MARKET: Equity markets have struggled to sustain the five-month rally that started in November, partly due to expectations that the Fed will cut interest rates in the first half of the year. On the other hand, some higher-than-expected recorded inflation data, strong labor market data, geopolitical tensions in the Middle East that triggered a rise in oil prices, as well as comments from Federal Reserve officials, including Chairman Jerome Powell, have caused market participants to push back the central bank’s rate cut expectations.
Bitcoin fluctuated around USD 60,000 as investors anticipated the upcoming halving event, an event that occurs every four years and reduces the production rate of bitcoin. Meanwhile, growing pessimism that the Federal Reserve will cut interest rates soon also weighed on sentiment.
INDONESIAN MARKET: INDONESIA will monitor the March Trade Balance figure which will most likely deliver a surplus, compared to the previous figure of USD 870mn, as Import growth far outpaced Exports.
Corporate News
Stable, Pefindo Labels Bank BJB (BJBR) idAA Rating Pemeringkat Efek Indonesia (Pefindo) reaffirmed the rating of West Java and Banten Regional Development Bank (BJBR) with idAA. It also applies to sustainable bonds I/2017 still outstanding. Pefindo also set the sustainable subordinated bond rating still outstanding with idA+. The subordinated bond rating is two levels below the rating of bank bjb. This is because there is a risk that subordinated bonds can be written off in non-viability conditions. This is in accordance with POJK 34 / POJK.03 / 2016. The outlook for the company’s rating is stable. The company rating reflects bank bjb’s very strong position in the captive market of West Java and Banten Province. In addition, asset quality is strong, and capitalization is very strong. The rating is limited by intense competition outside the captive market. The rating can be upgraded if bank bjb is able to strengthen its business profile substantially, and sustainably, must be accompanied by significant improvement in financial profile. Conversely, the rating may be downgraded if bank bjb’s business profile experiences a significant, and continuous decline, which may result from loss of market presence or weakening quality of the captive market. (Emiten News)
Domestic Issue
The Debt Securities Market Is Projected To Be Prospective In 2024, Here Are The Drivers In the midst of the increase in the yield of 10-year Government Debt Securities (SUN), the issuance of corporate debt securities is considered to remain lively until the end of the year. Head of the Pefindo Economic Research Division, Suhindarto, said that the 10-year SUN yield throughout 2024 will move in the range of 6.60% – 7.81%. “Geopolitical conditions and reference interest rates are the main catalysts that we take into account in these projections,” he told Kontan.co.id, last Sunday (21/4). If conditions are conducive, with geopolitical conflicts easing and the timing of the reduction in the benchmark interest rate becoming clearer, he assesses that the yield has the potential to fall back to the 6.60% – 6.80% range. However, if geopolitical tensions continue to escalate, expand and become prolonged, this will increase the risk. “Apart from that, the certainty of a reduction in interest rates, if it turns out that they will only be reduced at the end of the year, then this could also encourage yields to increase and be above 7%,” he explained. For information, currently the prospect of reducing US interest rates by the Fed has been reduced from the previously estimated three times to two times, which will then only be carried out in September and December. This occurs as inflation is still difficult to reduce to within the target range and is not yet seen continuing to decline towards 2%. If this happens, Darto estimates that Bank Indonesia (BI) will also continue to maintain domestic interest rates to protect the rupiah exchange rate from becoming too volatile. “High interest rates which will be maintained until the end of this year is one of the downside risks that will encourage yields to remain high,” he continued. Under these conditions, Pefindo assesses that investors will prefer to enter the debt securities market, both government and corporate debt securities. (Kontan)
Recommendation
US10YT is still struggling around the resistance area at a yield of 4.659% amidst a negative RSI divergence trend. ADVISE ; don’t forget to set your TRAILING STOP, closest support: MA10 / yield 4.606%.
ID10YT is increasingly pushing through the 7.0% yield level. ADVISE : HOLD, strong indication of uptrend, let your profit run, set Trailing Stop. Closest support: yield 6.90%.
Download full report HERE.
