Today’s Outlook:
US stocks market closed lower on Tuesday (16/05/23), after a disappointing forecast from Home Depot, and several economic data such as US Retail Sales (Apr.) pointed to softer consumer spending, while uncertainty about interest rates and debt limit negotiations weighed on the market sentiment. The US Commerce Department reported that retail sales (Apr.) rose only 0.4%, short of the estimate for an increase of 0.8%. On the other hand, Industrial Production (Apr.) bounced back to 0.5% on a monthly basis, a much better result than the -0.1% forecast. It is undeniable that recent data has indicated a slowing in the US economy as a result of a string of rate hikes by the Federal Reserve to fight high inflation. These soft landing signs happened along with recent negotiations over the US debt ceiling, led the market to await when the central bank will pause hiking or cut interest rates. Several comments from Fed officials stated they remain comfortable leaving the US benchmark interest rate at a high level for now.

The slowing economic atmosphere was also sensed in Europe, where the UK reported that the Claimant Count Change (Apr.) increased to 46,700, higher than the forecast of 31,200, thus putting their Unemployment Rate at 3.9%, higher than the forecast & previous 3.8%. The German ZEW Economic Conditions & Sentiment (May) came out with mixed numbers but did not fully imply solid economic conditions; moreover, the ZEW Economic Sentiment (May) even showed a very weak reading of -9.4, much lower than the expectation of -1.0. Eurozone GDP for 1/2023 came out in line at 1.3% YoY, and they were able to post a Trade Balance (Mar.) of EUR 25.6 billion, greater than the previous period’s EUR 3.7 billion.

As the largest country in Asia, China has not been able to boost its economy as expected, as shown by the Industrial Production (Apr.) data which was only able to release at 5.6% (lower than the forecast of 10.9%). Their Retail Sales (Apr.) also only managed to rise to 18.4%, not as good as the predicted 21%, but YTD growth  expanded to 8.46% YoY from the beginning of the year to the end of April (from 5.76% previously). Also, the Chinese Unemployment Rate fell slightly to 5.2% (vs forecast & previous 5.3%).

Corporate News
Pegadaian Issues IDR 2 Trillion Bonds and Sukuk PT Pegadaian issued bonds and sukuk with a target fund of IDR 2 trillion. The company will later use the funds as working capital financing. Bonds and Sukuk have a book-building period from May 2 to 22, 2023. The bond coupon offered for Series A is between 5.80%- 6.25% with a tenor of 370 days, while for Series B, it is 6.20% to 6.70% with a tenor of 370 days. (Berita

Domestic Issue
Ministry of Finance Gains IDR 15 Trillion Financing from SUN Auction The Ministry of Finance (MoF) received IDR 15 trillion in financing from the auction of Government Bonde (SUN) on Tuesday (16/5/2023). This figure is in line with the condition of yields on state securities in the secondary market, planned financing needs in 2023, and the current state budget conditions. Director of SUN Ministry of Finance Deni Ridwan said the bid value entered at the auction reached IDR 65.45 trillion. The high investor bidding occurred because global market conditions tend to be stable, influenced by the release of US inflation data which tends to decline. This increases investor expectations that the Fed will begin to be dovish at the end of the third quarter of 2023. (Berita Satu)

US10YT crawled above all three moving averages (10,20,50), placing the Support yield at 3.492-3.471%. ADVISE : Buy; TARGET: 3.613-3.644%. ID10YT wiped out the potential of technical rebound by re-testing the yield Support from the previous Low level of around 6.40%. ADVISE : Very Speculative Buy; Average Up above MA10 / yield 6.448%. TARGET : 6.50-6.531% / 6.557%.

Download full report HERE.