Today’s Outlook:
Wall Street stocks were mixed; as the US Dollar rose over other major world currencies, while US Treasury prices slipped. Economic data released on Thursday also indicated that the labor market in the US remains fairly tight, while the housing and manufacturing sectors remain sluggish. US jobless claims last week unexpectedly dropped to the lowest level in 2 months. The decline for two consecutive weeks lifts optimism that the US economy can avoid recession this year. As for US Inflation, it was recorded to have slipped further in June, but the strong labor market also supported wage growth, thereby helping people’s purchasing power to be maintained. On the other hand, the Philadelphia Fed Manufacturing Index, which is considered quite important in describing business conditions, especially in Philadelphia, was revealed to have worsened in July.
From another continent, China held their benchmark interest rate at 3.55% to boost their sluggish economic growth post COVID lockdown. Meanwhile, Germany reported PPI (June) which turned out to be a bit more heated than expected. Similarly, Japan reported National CPI & Core CPI for June where they were also slightly higher than May. As for this morning, South Korea has also released PPI data (June) which turned out to be in deflation both on an annual and monthly basis. Later in the afternoon, market participants will only highlight the UK regarding economic reports, whether the sluggishness in Retail Sales proved to be able to reduce in June.
Corporate News
Merdeka Copper (MDKA) Issues IDR 2.55 T Bonds Mining issuer of the Saratoga Group, PT Merdeka Copper and Gold Tbk (MDKA) will pursue a funding target of IDR 15 trillion from Sustainable Bond IV. One of them, in the near future, will issue Merdeka Copper Gold Phase III Sustainable Bonds IV Year 2023 worth IDR 2.55 trillion. These bonds will be offered scripless with a value of 100% divided into 2 series, including, series A amounting to IDR 1.08 trillion with a fixed interest rate of 6.75% per annum, which has a term of 367 Calendar Days from the date of issuance. Meanwhile, series B amounting to IDR 1.47 trillion with a fixed interest rate of 8% per annum, which has a term of 3 years from the date of issuance. (CNBC Indonesia)
Domestic Issue
Offering Officially Closed, ORI023 Records New High of IDR 28.9 Trillion Retail SBN Sales Government Publishing officially closed the offering period for the ORI0123 series of Retail Government Bonds (ORI) on Thursday (20/7/2023), after being offered since June 30 or lasting 21 days of the offering period. The offering period was actually closed on Thursday at 10.00 WIB, but since Wednesday night (19/7) the national quota of IDR 28.9 trillion orders has been sold out. As a result, on Thursday morning, the ORI023 booking quota was no longer left. The government decided not to increase the quota, even though the offering period is still a matter of a few hours. If the reservation value of IDR 28.9 trillion is officially determined by the Ministry of Finance, then the sale of ORI023 which is worth IDR 28.9 trillion will be a new record high in the history of Retail Government Securities (SBN) sales. (Bareksa)
Recommendation
US10YT appeared to attempt to correct its position by climbing back above MA50 Support and into a channel pattern, but was immediately blocked by MA10 & MA20 Resistance right at the 3.855% yield point. ADVISE: AVERAGE UP above 3.855-3.876% yield. TARGET yield: 4.0% / 4.091%. ID10YT faces a crucial challenge right at the 6.296-6.30% yield level before being able to accelerate higher towards TARGET yield: 6.336% (MA50) or 6.407%. ADVISE: AVERAGE UP accordingly.
Download full report HERE.
