Today’s Outlook:

ECONOMIC INDICATORS: There is no economic data of note expected Monday, but investors will be awaiting inflation readings due out later in the week. Ticketmaster parent Live Nation and food and facility service provider Aramark are among companies reporting earnings on Monday.

ASIA & EUROPEAN MARKETS: Asia-Pacific markets fell Monday after China’s October inflation numbers came in lower than expected, prompting concerns over the recovery in the world’s second-largest economy, while European markets closed lower on Friday, as investors digested corporate results and quarter-point interest rate cuts from the U.S. Federal Reserve and Bank of England. The pan-European Stoxx 600 ended the session 0.66% lower, with most sectors and major bourses in closing in the red. Mining stocks led the losses, shedding 4.2%, while travel and leisure stocks ticked up 0.8%. The index ended down 0.19% on the week.

– On Monday, China kicks off its Singles’ Day — the equivalent of Black Friday in the country. A note from ING on Friday said that Singles’ Day will show how consumption was faring in China. They suspected that given the shift toward value-for-money purchases and online shopping, they’ll continue to see solid growth numbers from the event that should comfortably outpace the overall consumption growth momentum.

– GERMANY: Chancellor Olaf Scholz sacked Finance Minister Christian Lindner on Wednesday evening and appointed his successor on Thursday. The move, which brought a dramatic end to the country’s three-way coalition government, raises the possibility of an immediate no-confidence vote and new elections. Scholz has said he does not want to call a vote of confidence before mid-January.

FIXED INCOME & CURRENCY: The 10-year US Treasury yield fell for a second day Friday, set to finish the week lower even after a big pop triggered by Donald Trump’s presidential win. The benchmark 10-year rate dipped 4 basis points to 4.29% after falling about 11 basis points in the previous session. The yields is now lower than last Friday’s level of 4.37%. The 2-year Treasury yield traded 4 basis points higher at 4.24%. Yields and prices have an inverted relationship and one basis point is equivalent to 0.01%. Meanwhile, The dollar rose on Friday and was heading for a slight weekly gain as investors evaluated the likely impact on the American economy of Tuesday’s election of Republican Donald Trump as U.S. president. Analysts expect Trump’s policy proposals — including more trade tariffs, a clampdown on illegal immigration, lower taxes and business deregulation — to boost growth and inflation. But in the near term there remains considerable uncertainty over what policies will be introduced, and whether discussion of some strategies like tariffs could be negotiating tactics.

– The US dollar index jumped to a four-month high of 105.44 on Wednesday, but has dipped since, partly due to profit taking. It was up 0.33% on the day at 104.75 on Friday and on pace for a 0.45% weekly increase.

– China’s yuan weakened after Beijing unveiled a 10 trillion yuan (USD 1.4 trillion) debt package on Friday to ease local government financing strains and stabilize flagging economic growth.

The euro dropped 0.52% to USD 1.0748 and was headed for an 0.8% decline for the week, which saw the collapse of Germany’s coalition government on Wednesday.

INDONESIA: Reported Oct Foreign Exchange Reserves at USD 151.2bn, up from Sept at USD 149.9bn. Today we will wait for October’s Motor and Car Sales, and Consumer Confidence.

Domestic Issue
Prabowo Gives Banks 6 Months to Write Off MSME Bad Debts
President Prabowo Subianto has enacted Government Regulation (PP) No. 47/2024 on the Write-off of Bad Debts to Micro, Small and Medium Enterprises on Tuesday (5/11/2024). The regulation regulates the write-off of bad debts by banks and/or state-owned non-bank financial institutions to MSMEs by writing off and writing off bad debts, as well as by the government to MSMEs by conditional write-off and absolute write-off of bad debts. Based on Article 19, the bad debt write-off policy is valid for a period of 6 months from the enactment of the PP. This means that both banks and state-owned non-bank financial institutions must complete implementing the mandate of the regulation no later than May 2025. For state-owned banks and/ or non-bank financial institutions, the provisions for writing off bad debts include receivables for which restructuring efforts have been made and collection efforts have been made, but remain uncollectible. This is regulated in Article 4. Then in Article 6, write-offs can be carried out against bad debts that have been written off, with criteria including a maximum principal value of IDR 500 million per debtor or customer; have been written off for at least 5 years since this regulation took effect; not financing guaranteed by insurance/guarantee; and there is no credit or financing collateral. Regarding potential losses in implementing this regulation, Article 7 paragraph (2) explains that the bank’s losses are not state financial losses as long as it can be proven that the actions were taken in good faith, the provisions of laws and regulations, the articles of association, and the principles of good corporate governance. (Bisnis)

Corporate News
BBRI: Pefindo Withdraws BRI Bond Rating, Here’s Why
PT Pemeringkat Efek Indonesia (PEFINDO) said that it has withdrawn the rating of PT Bank Rakyat Indonesia (Persero) Tbk (BBRI)’s bonds. Pefindo in a release on Friday (8/11) explained that the rating was withdrawn in connection with the repayment of the Third Sustainable Bonds of Bank BRI Phase I Year 2019 Series C on November 7, 2024 issued by PT Bank Rakyat Indonesia (Persero) Tbk. The last rating given was idAAA which was determined on March 6, 2024. (Emiten News)

Recommendation

-YIELD US TREASURY has broken down below MA10 dynamic support in 4.32% after reaching the major trendline resistance in 4.84%. The downturn reversal comes in the weakening stage of the rally after US 10 Year Treasury Yield formed a positive divergence in RSI during September, which signaled a major imminent rebound. With the US 10 Year Treasury Yield going from a rally to a sideways trend, we view the yield may be fluctuating with low-volatility post-presidential election and post Fed Rate cut from last week. The fluctuation channel resistance is 4.38% / 4.43%, and support is 4.27% / 4.21%.

-YIELD ID TREASURY 10-Year broke down from the trendline support in 6.77% as investors hold confidence in Indonesia’s more aggressive international political posturing following Prabowo’s visit to China and his administration’s choice to register Indonesia to be a part of BRICS. This was also signified by Indonesia’s 10 Year Treasury Bond Yield’s difficulty in breaking out of its dynamic resistance MA10 in 6.78%. We view the Indonesia’s 10 Year Yield’s downward trend may continue to 6.70% support before stabilizing. ADVICE: Prepare for the yield to continue to tick downwards in the face of Indonesia’s major international political maneuverings.

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