SUN Benchmark moves mixed, ahead of the results of the Fed’s FOMC Meeting. Yesterday’s market movement also responded to the slowdown in Indonesia’s manufacturing expansion. Declining demand for Indonesian-made goods, along with economic pressure from a number of major trading partners, put pressure on Indonesia’s Manufacturing PMI for the October period, expansion was recorded at 51.8 points (Vs. Sept. 53.7 points).
Corporate Bonds
Bank Mandiri Plans to Issue Green Bonds in 2023. PT Bank Mandiri (Persero) Tbk plans to issue green bonds to support funding for sustainable projects. The funding will be carried out in 2023 considering that this year only leaves two months. (Kumparan)
Domestic Issue
State Spending Sustains 4Q22 Economy. The Minister of Finance revealed that they would direct state spending of around IDR1,192 trillion to encourage the demands side that can support economic growth in 4Q22. The reason is that the turmoil of the world economy began to affect domestically within the fourth quarter, as seen in the national exports’ slowdown. In more detail, high inflation and currency pressures affect Indonesia’s export destination countries, such as the United States, Europe, and China. Thus, the government must work on policies to maintain the domestic economy. (Investor Daily)
Recommendation
The hawkish signal continued, lessening expectations of the Fed Pivot in December. The Fed, again, raised the FFR by +75Bps for the fourth time in November and suggested the Next FFR hike would face a higher threshold. The Fed Chairman, Jerome Powell, also rejected the idea of a “Fed Pause”. Additionally, short-tenor bonds with the highest sensitivity in the FFR gains, UST2Y recorded a yield increase that broke the All-Time High level of 4.60%. This statement by The Fed comes as inflation is projected to remain at its highest level or above 8% YoY, according to a Bloomberg survey.
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