FFR September speculation rose +100Bps, responding to Lagging Indicators which recorded an increase in the rate of inflation. Last week, CME FedWatch started projecting a +100Bps September FFR increase probability of 18%, from the previous +75Bps increase of 82%, responding negatively to the US Core Inflation rate for August period to 6.3% YoY (Vs. Jul. 5.9%). In addition to the Labor Market, Core Inflation is one of the Lagging Indicators, the Fed’s benchmark in determining the FFR amount. This aggressive Hawkish speculation, coming after June and July rose +75Bps each, puts the US at risk of an economic recession. This can be seen from the widening of the UST2Y Yield Inversion spread (3.99%) Vs. UST10Y (3.46%) from 25Bps to 43Bps a week.
Corporate Bonds
SMMA Issues IDR 1.6 Trillion Shelf-Registered Bonds. PT Sinar Mas Multiartha Tbk (SMMA) will again offer Shelf-Registered Bonds II Phase III 2022 amounting to IDR 1.66 trillion, in two series. First, series A with an offered amount of Rp 580 billion with a fixed interest rate of 9.75 percent for a five-year term. Second, series B with the principal amount of series B bonds offered amounting to Rp. 1.08 trillion with a fixed interest rate of 10.50 percent per year with a tenor of 10 years. The sustainable bonds are part of the Shelf-Registered Bonds II with a target fund of IDR 5 trillion. (liputan6.com)
Domestic Issue
Carbon Tax will be Implemented Soon. The Ministry of Finance (Kemenkeu) said that the implementation of the carbon tax is expected to take effect before the summit of the G20 Summit in Bali. Currently, the government plans to issue three roadmaps, namely the energy transition roadmap, the carbon market roadmap and the carbon tax roadmap. So that the implementation of the carbon tax rules must be harmonized with the roadmap. (Kontan)
Recommendation
Sacred Thursday, the main indicator to determine the direction of the JCI ahead of the close of 3Q22. Three Central Banks are projected to return to Hawkish, with BI +25Bps; BoE +50Bps and the Fed +75Bps, Thursday West Indonesia Time. NHKSI Research sees that Hawkish continued aggressively by the Fed by using Lagging Indicators (Core Inflation, Labor Market) which still shows inflation, while Leading Indicators (Gold, Copper) have shown deflation, potentially bringing US GDP to the verge of recession, after experiencing a Technical Recession. 1H22. In fact, global oil prices have fallen more than 30% from their peak levels.
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