Today’s Outlook:
US MARKETS: the latest ECONOMIC INDICATORS revealed that Durable Goods Orders for Sept still fell by the same magnitude, minus 0.8% as Aug. Despite the contraction, the figure was better than the -1.1% forecast. On the other hand, Univ. Of Michigan has more optimism on Consumer Expectations & Sentiment going forward, even they see economic conditions starting this Oct has also improved. Their US Inflation Expectations for the next 1 year & 5 years range from 2.7% – 3.0%.
U.S. POLITICAL MAP: Former Republican President DONALD TRUMP and Democratic Vice President KAMALA HARRIS are neck-and-neck in key states ahead of the November 5 election. Investors are nervous about the outcome which is expected to shake world markets and create new geopolitical uncertainties. Chief investment officers consider that the market is still somewhat uncertain and partly due to the fact that the US market has gained 6 consecutive weeks and posted gains 10 out of 11 months this year. Historically, volatility in election years tends to spike in October, with market participants now nervous ahead of the key date. On Sunday, Republican presidential candidate Donald Trump led a rally at Madison Square Garden, New York; in an effort to boost the electability of Republican candidates in the New York congressional elections. The state has seven competitive seats that could help determine whether the party will have a majority in the US House of Representatives next year. The event could also bolster Trump’s support particularly in northeastern Pennsylvania, a battleground state increasingly home to New York commuters.
FIXED INCOME & CURRENCY: US TREASURY YIELD edged higher as investors await next week’s key employment data for fresh clues on the likelihood of a Federal Reserve interest rate cut. Traders estimate the odds of a 25 basis point rate cut at the Fed’s November meeting at nearly 95%, according to CME FedWatch. The yield on the benchmark 10-year US Treasury note rose 3.8 basis points to 4.24%.
– THE DOLLAR strengthened and is poised for a fourth weekly gain against the Japanese YEN, as an uncertain market backdrop kept the Yen near a 3-month low ahead of the general election in Japan over the weekend. The Dollar gained 0.26% against the Yen at 152.22. The Euro was down 0.29% at USD 1.0796. The DOLLAR INDEX (DXY), which measures the greenback’s strength against a basket of currencies including the Yen and Euro, rose 0.24% to 104.30.
COMMODITIES: On Friday, BRENT crude oil closed up 2.25% at USD 76.05/barrel. US WTI crude oil closed up 2.27% to USD 71.78. Both crude oil futures ended last week with gains of around 4%. However, this quickly reversed on Monday. Oil prices plummeted nearly USD 4/barrel this morning after the world received reports that ISRAEL’S retaliatory strikes on IRAN over the weekend missed Tehran’s oil and nuclear infrastructure, thereby not disrupting energy supplies, thus easing GEOPOLITICAL CONFLICT in the Middle East. At the time of writing, BRENT crude oil prices have slipped USD 3.89, or 5.1%, to USD 72.16/barrel, while US WTI crude oil is priced at USD 68.02/barrel, a drop of USD 3.76, or 5.2%.
– GOLD prices rose in directionless trade after dropping from record highs. Spot gold rose 0.28% to USD 2,743.31/ounce. Prices had reached an all-time high of USD 2,758.37 on Wednesday. Portfolio managers assess that in the short term, there is no doubt that the market is being swayed by political developments and expectations, as well as the general perception that Trump will be more market friendly than Harris.
Corporate News
Indonesia Infrastructure Finance (IIF) to List IDR 1 Trillion Bonds
PT Indonesia Infrastructure Finance (IIF) will list the bonds that have been successfully offered on October 28, 2024. In this offering, IIF issued bonds worth IDR 1 trillion. These bonds are titled sustainable bonds II phase II in 2024. These bonds were released in four series. First, series A bonds with a tenor of 370 days with a value of IDR 200 billion and paying a coupon of 6.3%. Series B has a principal value of IDR 250 billion with a fixed interest rate of 6.55% for a period of three years. In series C, IIF issued IDR 300 billion with a fixed interest rate of 6.95% with a seven-year tenor. While finally series D was offered with an interest rate of 7.05% with a 10-year term, IDR 250 billion was sold. IIF obtained an idAAA rating from Pefindo for the bond issuance plan. While the underwriters who assisted the bond public offering included PT BRI Danareksa Sekuritas, PT Indo Premier Sekuritas and PT Mandiri Sekuritas. (Kontan)
Domestic Issue
Pefindo Receives IDR 41.6 Trillion Debt Securities Mandate
PT Pemeringkat Efek Indonesia (Pefindo) received a mandate to issue debt securities with a total value of nearly IDR 41.6 trillion that have not been listed on the Indonesia Stock Exchange (IDX) until September 30, 2024. Pefindo analyst Martin Pandiangan explained that the mandate was dominated by five major industrial sectors, with pulp, mining, banking, multifinance, and holding companies as the main players. “Of the IDR 41.6 trillion mandate we received, the pulp and paper products industry, as well as mining, topped the list of sectors planning to issue debt securities,” he explained in Pefindo’s Media Update, Thursday (24/10/2024). According to Martini, this shows that the two sectors still play a big role in raising funds in the capital market, followed by the banking and finance sectors. As for the type of instrument, the majority of debt securities to be issued are in the form of Sustainable Public Offerings (PUB) bonds with a value of around IDR 24 trillion, followed by PUB Sukuk of IDR 5.7 trillion and regular bonds worth IDR 5.4 trillion. Furthermore, Pefindo noted that most of the issuers come from non-SOE companies, with 18 companies planning to issue debt securities worth IDR 29.4 trillion. Meanwhile, state-owned companies, subsidiaries of state-owned companies, and regional-owned enterprises (BUMD) plan to issue debt securities worth IDR 12.2 trillion through 14 companies. (Investor Daily)
Recommendation
US10YT stalled right at the TARGET yield of around 4.305%, giving rise to a SHOOTING STAR-like candle (in the resistance area), even as RSI showed a slowdown in buying momentum. All indications point towards ADVISE in anticipation of a pullback in yields, possibly towards the nearest Support: MA10 / 4.18% which is still safe to support this yield uptrend, unless the level is broken and will cause the yield to slide down to the next Support: MA20 / 4.074% currently, up to 4.022%. POTENTIAL: anticipate bond price strengthening soon.
ID10YT continued to weaken yield once it was stopped by the trendline resistance around 6.83%. with RSI negative divergence, it is natural that yield should pullback first even to the third Moving Average Support: 6.711% up to 6.615%. ADVISE: anticipate temporary price strengthening, when yield continues consolidation.
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