Today’s Outlook:

GLOBAL MARKETS: Optimism of a US interest rate cut this year could come to fruition after the latest US economic data showed an economic slowdown; while Europe is abuzz with the political process as the UK election situation predicts a historic victory for the Labour Party. Similarly, the French bourse climbed a second day by 0.8% amid more intense efforts by the opposition France National Rally (FRN) to prevent the far-right from taking power. In Europe, GERMAN industrial orders fell unexpectedly in May, while another report showed SWISS inflation fell last month, making markets think that it is unlikely that the Swiss National Bank will cut interest rates again later this year. EUROPEAN CENTRAL BANK officials mostly believe inflation will continue to fall but some are uncomfortable with last month’s rate cut given the many negative surprises, based on their meeting results. Today there will be more economic data coming from Europe such as: UK housing data, German Industrial Production, Eurozone Retail Sales.

Talking about ECONOMIC INDICATORS, the weakest updated US economic data on labor, grows the chance of the first rate cut happening in September to 74%, growing from 65%, for a total of 47bps of rate cuts over the rest of the year. Later tonight from 19:30 WIB the key US labor data of Nonfarm Payrolls (June), along with average Hourly Wages, and not forgetting the Unemployment Rate; will further shape the thinking of Fed officials in their interest rate decision.

With the US economy heading towards a soft landing, the US DOLLAR retreated regularly against other currencies. The EURO rose to USD 1.0797 from USD 1.0666 lows, while the DOLLAR INDEX hit a 3-week low. Only the YEN has yet to recover from decades of lows, currently trading at 161.11 / Dollar after plummeting to a 38-year bottom: 161.96 / Dollar on Wednesday.

The USD drop benefited COMMODITIES, where GOLD prices rallied to USD 2358 / ounce, from USD 2318 earlier in the week. OIL prices edged lower after a day of gains on the back of a huge unexpected drop in US oil stocks. BRENT retreated 43cents to USD 86.93/barrel, while US WTI deflated 54cents to USD 83.03/barrel. Meanwhile, INDONESIA market participants today will be waiting for Foreign Exchange Reserves (June) information.

Corporate News
WIFI: Bond Issued Successfully, WIFI Boosts Telecommunication Infrastructure
PT Integrasi Jaringan Ekosistem (Weave) raised IDR 600 billion in bond funds. Even the bonds of the subsidiary of Digital Synergy Solutions, aka Surge (WIFI), were oversubscribed 101.5 percent. Weave focuses on expanding telecommunications infrastructure and developing a digital ecosystem in Indonesia. The majority of the bond proceeds will be used for capital expenditure. Precisely, for the expansion of connectivity infrastructure, and a small portion to strengthen the company’s working capital. Currently, the company operates 7,000 km of large-capacity fiber optic backbone infrastructure along the railway line, and other routes in Java. (Emiten News)

Domestic Issue
Government Holds SUN Auction on July 9, Targeting IDR 24 Trillion Funds
The Directorate of Government Securities at the Directorate General of Financing and Risk Management, Ministry of Finance announced that on Tuesday, July 9, 2024, the Government will conduct an auction of Rupiah-denominated Government Securities (SUN). The auction aims to fulfill part of the financing target in the 2024 State Budget. The indicative target of the auction is set at IDR24 trillion and the maximum target is IDR36 trillion. There are 7 series of SUN to be auctioned, consisting of State Treasury Notes (SPN) and State Bonds (ON), the details are as follows: SPN03241009 (New Issuance) with a maturity date of October 9, 2024 and a discount coupon; SPN12250710 (New Issuance), with a maturity date of July 10, 2025 and a discount coupon; FR0101 (Reopening), with a maturity date of April 15, 2029 and an interest coupon of 6. 875%; FR0100 (Reopening), maturity date February 15, 2034 and interest coupon 6.625%; FR0098 (Reopening), maturity date June 15, 2038 and interest coupon 7.125%; FR0097 (Reopening), maturity date June 15, 2043 and interest coupon 7.125% and FR0102 (Reopening), maturity date July 15, 2024 and interest coupon 6.875%


US10YT is stuck on MA10 & MA20 Support around yield 4.353% – 4.323% in the course of their consolidation. Nearest Resistance: MA50 / yield 4.412%. ADVISE: anticipate further Support break towards yield 4.20%, then bond prices will appreciate again.

ID10YT started testing short term trendline support accompanied by MA20 around yield 7.05%. Failure to stay above this level will make ID10YT test psychological Support at yield 7.00% in bullish swing towards TARGET yield 7.243% – 7.325%.

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