Today’s Outlook:
Await the Federal Reserve chairman Jerome Powell’s testimony before Congress due tonight at 21.00 Western Indonesia Time and will be closely watched for clues on how strongly the head of US Central Bank stresses the need to resume rate hikes following a pause last week. China’s central bank cut another 10bps benchmark interest rate to 3.55% to further stimulate their economy, but on the one hand it also confirms that China needs more stimulus to boost their slow economic recovery after the Covid pandemic.

In terms of economic data, the US Housing Starts (May) report rose 21.7% mom, as well as Building Permits (May) which recorded an increase of 5.2% mom; in contrast to the previous month’s position in negative numbers; signaling the health of the property sector is still quite good. Germany reported Inflation at the producer level or PPI (May) managed to flatten 1%yoy and -1.4% mom; lower growth than expectations and the previous period. As for today, the UK Inflation rate will get the spotlight as the May figure is expected to tame slightly to 8.5% yoy compared to April at 8.7%, although Core CPI may still be a bit tougher to beat. From the Asian continent, South Korea released PPI (May) data which fell to 0.6%yoy, slightly higher than expected but successfully sloping from April at 1.6%).

Bank Indonesia recorded foreign capital outflow from the domestic financial market in the second week of June 2023. Based on transaction data compiled by Bank Indonesia (BI), non-residents in the domestic financial market sold a net of IDR 2.38 trillion; which is divided into IDR 640 billion in the SBN market and IDR 1.74 trillion net sell in the stock market. Along with the departure of foreign funds from the domestic financial market, Indonesia’s investment risk premium also increased slightly. As seen from Indonesia’s 5-year credit default swap (CDS) premium as of June 15, 2023 amounting to 80.55 bps, or a slight increase from 80.50 bps on June 9, 2023. Furthermore, during the current year 2023 or from January 2023 to June 15, 2023, foreign capital flows remained net in both the SBN and stock markets.

From  BI records, non-residents recorded a net purchase of IDR 82.50 trillion in the SBN market and a net purchase of IDR 17.14 trillion in the stock market. Investors’ nervousness on the increasingly gloomy global financial market outlook amidst predictions of a continued upward trend in US benchmark interest rates, sent Rupiah weakening to above IDR15000/USD after almost 3 months comfortably below that psychological level.

Corporate News
Indah Kiat Pulp (INKP) Issues Bonds and Sukuk Sinarmas Group paper issuer, PT Indah Kiat Pulp & Paper Tbk (INKP) issued bonds and sukuk mudharabah worth a total of IDR 4 trillion with the majority of funds being allocated for payment of obligations. Based on the prospectus, INKP will issue sustainable bonds IV phase I 2023 worth IDR 3.25 trillion which is part of the ongoing public offering of Bond IV with a target fund of IDR 12 T. In addition to issuing bonds, INKP will also issue sustainable sukuk mudharabah III phase I 2023 amounting to IDR 750 billion. The target of this sukuk issuance is IDR 3 trillion. (Bisnis)

Domestic Issue
Sharia Securities Auction Results Fall Investor interest in the auction of Government Sharia Securities (SBSN) on Tuesday (20/6) is still considered high. The incoming bid at this week’s auction recorded a value of IDR 41.38 trillion. Senior Economist KB Valbury Sekuritas Fikri C. Permana said that the results of the auction this time were quite high because the target indication was only IDR 7 trillion. He assessed that the decline in auction bids was also influenced by expectations of the Fed Rate, which is likely to rise twice by 25 basis points (bps). In addition, since the Fed Rate last week the rupiah has tended to depreciate because it has passed the psychological level of IDR 15,000. “So, maybe this is what also encourages foreigners to refrain from entering the SBN market at this auction,” Fikri said. (Kontan)

US10YT finally broke the short-term support & now the yield is moving below MA10 & MA20; making the yield level of 3.74-3.763% as the nearest resistance now. ADVISE: Hold (reduce position); Wait & See. The following yield support: MA50 / around 3.623%

ID10YT has successfully perched back above MA10, the yield is attempting to break through the next Resistance which is MA20 at the level of 6.363%. If it can break out then it will also break from the PARALLEL CHANNEL pattern and open up opportunities for strengthening towards the TARGET yield of 6.478% (MA50). ADVISE: Wait for break out confirmation; get ready to Average Up again.

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