Market Participants Are on Edge Over The Silicon Valley Bank Collapse

Market participants are on edge over the Silicon Valley Bank collapse, which is the biggest financial collapse since the 2008 financial crisis; the Fed’s campaign to fight inflation has exposed vulnerabilities in the financial system that could grow if it ratchets up its rate hikes. Treasury yields extended their slide for a second day; the threat of contagion effect from this heated issue made investors hunt for safe-haven assets, making Gold prices jump 2.1% to USD 1868.79 / ounce. The price of the benchmark 10-year US Treasury rose 61/32 to yield 3.6892% from 3.923% on Thursday. While the price of the 30-year bond rose 101/32 putting the yield at 3.6899%, from 3.87% the previous position.

Meanwhile, the labor data that market participants have been waiting for was released mixed last Friday, where US Nonfarm Payrolls (Feb.) recorded new job additions in the government sector of 311k, higher than the forecast of 205k but down considerably from the surprising Jan. period of 504k. The Unemployment Rate (Feb.) also rose to 3.6% (from the previous month’s 3.4%). The economic data has actually eased concerns that the Fed will raise rates by 50bps at next week’s FOMC Meeting, after Jerome Powell’s hawkish comments last week. Financial markets are pricing in a 42.5% probability of a 50bps rate hike, and a 57.5% probability of a 25bps hike in order to tame the Inflation rate to the Fed Funds Rate target at the upcoming FOMC Meeting on 21-22 March. Complementing the crucial economic data for the March 21-22 FOMC Meeting decision makers, next Tuesday the US Inflation figure (Feb.) will be released, where economists expect inflation to ease to 6% YoY and 0.4% MoM (from 6.4% YoY & 0.5% MoM in the last position). Thus, the US Dollar weakened against a number of major world currencies, bringing the US Dollar index (DXY) down by 0.65%, with the Euro gained 0.54%.

Corporate News
Indomobil Finance Issues IDR 1.28 Trillion Bonds for Financing Business PT Indomobil Finance Indonesia will issue IDR 1.28 trillion bonds. Indomobil Finance Sustainable Bonds V Phase II Year 2023 is part of Indomobil Finance Sustainable Bonds V with a total value of IDR 5 trillion. Indomobil Finance has issued the first phase of bonds worth IDR 600 billion in July 2022. In this second phase, Indomobil Finance will issue bonds in three series. Series A bonds have a principal value of IDR 918 billion. The bonds with a tenor of 370 days offer a fixed interest rate of 6.25%. Series B bonds have a principal value of IDR 279.58 billion. Bonds with a 3-year tenor offer a fixed interest rate of 7.5% per annum. Series C bonds have a principal value of IDR 86.32 billion. Bonds with a 5-year tenor offer a fixed interest rate of 7.75% per year. The bond issuance prospectus states that Indomobil will use all proceeds from the bond issuance after deducting issuance costs for working capital in financing motor vehicles and heavy equipment as the company’s business activities. (Kontan)

Domestic Issue
Three New Bonds Entered, IDXRecords Total Issuance of IDR 21.02 T Throughout 2023 The Indonesia Stock Exchange (IDX) recorded total bond and sukuk emissions throughout 2023 worth IDR 21.02 trillion. The amount of emissions is divided into 18 emissions from 17 issuers. IDX Corporate Secretary, Yulianto Aji Sadono revealed that as for the total bond and sukuk emissions recorded on the IDX amounted to 520 emissions with an outstanding nominal value of IDR 454.04 trillion and USD 47.5 million, issued by 127 issuers. Meanwhile, Government Securities (SBN) recorded on the IDX amounted to 187 series with a nominal value of IDR 5,449.14 trillion and USD 452.11 million. Then, for Asset-Backed Securities (EBA) there are 8 emissions worth IDR 3.27 trillion. (Investor Id)

Recommendation
US10YT formed a Doji after dropping sharply to the MA50/3.701 Support area, leading to speculation that there will be a trend reversal (minor trend). However, this Doji needs to be confirmed by a green candle the next day, with a closing above the nearest Resistance: 3.752% yield, before paving the way towards MA10 & MA20 Resistance, which is currently around 3.90% yield. ADVISE: Speculative Buy, Average Up accordingly. ID10YT yield drop to the first Support: MA10 / 6.965% has not broken the ongoing short-term uptrend at all. ADVISE: increase caution if MA10 Support is broken, then yield will fall further towards MA20 Support / yield 6.863%.

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