Today’s Outlook:
Global stock indexes fell and the U.S. dollar rose on Friday (23/06/23) as investors digested comments from Federal Reserve officials that signaled further interest rate hikes ahead. The S&P500 and Nasdaq even closed last week by ending their weekly gains which had bagged 5-week and 8-week straight gains, respectively. San Francisco Fed Bank President Mary Daly said that two more rate hikes this year is a “very reasonable” projection. The statement follows comments by Fed Chairman Jerome Powell who had mentioned earlier that the US central bank will not end its tight monetary policy yet, while he provided reassurance that the Fed would proceed with caution. Financial markets have baked in a 74.4% likelihood that the Fed will resume hiking the Fed funds target rate by another 25 basis points at the July meeting, according to CME’s FedWatch tool. The economic data released last Friday explained that US business activity in June fell to a 3-month low as the service sector slowed for the first time this year, and the contraction in the manufacturing sector deepened. Similarly, business activity in continental Europe, at least reflected in June PMI data from Germany, the Euro Zone, and the UK which all moved towards contraction.
Treasury yields also slipped as markets expect at least one more rate hike in the near future, and factor in the impact on economic growth that is already slowing lower than expected in the Euro Zone region. The yield on the benchmark 10-year US Treasury fell 6.2bps to 3.737% at the close of trading last Friday. Similarly, Euro Zone government bond yields also contracted following reports of slower PMIs in June; while business activity in France also contracted this month for the first time in 5 months.
US Dollar Index rose 0.469%; oil prices closed lower and posted a weekly decline as traders worried about weak demand.
Considering the market sentiment, plus this week will be a short trading week for JCI due to the Eid al-Adha holiday (and joint leave) from 28-30 June, investors will usually choose to be cautious and refrain from positioning too much, considering the unpredictability of the market during the holiday.
Corporate News
Bank Mandiri (BMRI) Green Bond Oversubscribed 3.74 Times PT Bank Mandiri (Persero) Tbk. (BMRI) noted that the initial offer (bookbuilding) for Sustainable Environmental Bonds I (Green Bond) was oversubscribed 3.74 times. Meanwhile, incoming bids during this period are known to have reached IDR 18.7 trillion from the fundraising target set at IDR 5 trillion. Bank Mandiri Deputy President Director Alexandra Askandar said that the oversubscription was in line with increased investor interest in a number of sustainable financial products. For information, this bond will be issued in two series, namely Series A which has a period of 3 years with a coupon of 5.80 percent per year and Series B which has a period of 5 years with a coupon of 6.10 percent per year. (Bisnis)
Domestic Issue
Government to Open ORI023 Offering Starting June 30, 2023 The government through the Directorate General of Financing and Risk Management (DJPPR) will again offer the ORI023 series of Government Securities. The offering will begin on June 30, backward from the previous schedule of June 28, 2023. Director of Government Securities of DJPPR Deni Ridwan said that the determination of the SBN Retail marketing schedule will always consider the right time such as public holidays, payday dates, and maturing retail SBN. So that there is a re-investment opportunity for investors. Regarding the coupon, he said that it is still tentative because it is still being finalized. It is planned that the coupon from ORI023 will be announced on Monday (26/6). (Kontan)
Recommendation
US10YT seems unable to end this Sideways as long as it still moves below MA10 & MA20; and also has not managed to break the Trendline Resistance of 3.810%. ADVISE: HOLD; Average Up accordingly. ID10YT is attempting to test MA10 Resistance at the yield level of 6.304%. A break above this level will open up opportunities for strengthening to the following Resistance, namely MA20 at the yield level of 6.347-6.369%; and the next TARGET: 6.453% / 6.479%. ADVISE: Average Up accordingly.
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