The Dollar Rose and Was On Track for Its Strongest Week

Today’s Outlook:
US MARKETS: The dollar rose and was on track for its strongest week since mid-January, as U.S. inflation data has led to new hopes for interest rate cuts. Data on Friday showed U.S. import prices increased marginally in February as a surge in the cost of petroleum products was partially offset by modest gains elsewhere, suggesting a heating up inflation picture. Markets are pricing in a 59.2% chance for a rate cut of at least 25 basis points (bps) by the Fed in June, down from 59.5% in the prior session and 73.3% a week ago, according to CME’s FedWatch Tool. The central bank is widely expected to hold rates steady at its policy meeting next week but investors will be watching the central bank’s economic projections, including its interest rate forecast.

THE DOLLAR INDEX gained 0.05% at 103.43, recouping some of the prior week’s decline with a gain of 0.71%, with the euro up 0.06% at USD 1.0889 on the session. Sterling weakened 0.13% at USD 1.273. Against the Japanese yen, the dollar strengthened 0.49% to 149.05, despite expectations the Bank of Japan is expected to end its negative intere

THE YIELD ON BENCHMARK US 10-year notes was up 1 basis point at 4.308% after reaching 4.322%, its highest since Feb. 23. The 10-year yield has jumped 22 bps this week, the most since mid-October. The 2-year note yield, which typically moves in step with interest rate expectations, rose 3.9 basis points to 4.7297% and has  risen 24.6 bps for the week, its largest jump in two months.

COMMODITIES: Oil prices dipped, a day after topping USD 85 a barrel for the first time since November. The oil benchmarks were on track to close out the week with a gain of more than 3%. U.S. crude settled down 0.27% lower on the day at USD 81.04 a barrel and Brent settled off 0.09% to USD 85.34 per barrel.

ASIA & EUROPE MARKETS: some important data coming from CHINA: Unemployment Rate, Industrial Production, Retail Sales. Followed in the afternoon, from EUROZONE: CPI (Feb) & Trade Balance (Jan), where it is expected that Inflation at the consumer level will be able to narrow to 2.6% yoy from 2.8% in the previous month.

Corporate News
PTPP Bonds Receive idA Outlook Stable Rating from Pefindo PT PP (Persero) Tbk (PTPP) received a rating certificate from Pefindo for the company’s outlook and a number of debt securities. Launching the disclosure of IDX information, Sunday (3/17), Pefindo gave an idA (Single A) rating with a stable outlook for a number of PTPP bonds.The bonds included in the Pefindo rating are Sustainable Bonds II Phase II Series B Year 2019, Sustainable Bonds III Phase I Series A and Series B Year 2021, Sustainable Bonds III Phase II Series A and Series B Year 2022, and Sustainable Bonds III Year 2023.These four bonds have a value of IDR 2.79 trillion.Overall, PTPP also received an idA (Single A) company rating with a stable outlook.”Obligors with an idA rating have a strong ability compared to other Indonesian obligors to fulfill their long-term financial commitments.However, the obligor’s ability may be easily affected by adverse changes in economic conditions and conditions compared to obligors with higher ratings,” Pefindo said in the disclosure of information. All Pefindo ratings on PTPP are valid from March 13, 2024 to March 1, 2025.(Kontan)

Domestic Issue
Indonesia’s Foreign Debt Decreases, Remaining IDR 6,321.62 Trillion Indonesia’s Foreign Debt (ULN) was recorded at USD 405.7 billion at the end of January. Assuming USD 1 is equivalent to IDR 15,582 as the Bank Indonesia (BI) reference rate yesterday, Indonesia’s external debt is equivalent to IDR 6,321.62 trillion. The figure for Indonesia’s Foreign Debt (ULN) decreased compared to the previous month which amounted to USD 408.1 billion. Government Foreign Debt (ULN) as of January was at USD 194.4 billion. A decrease compared to December 2023 which amounted to USD 196.6 billion. On an annual basis, government foreign debt grew by 0.1% (yoy), slowing down compared to the previous month by 5.4% (yoy). The decline in government foreign debt was partly influenced by the repayment of the maturing Government Securities (SBN) series. Government foreign debt, the BI report added, was used for various purposes, namely Health Services and Social Activities (21.1% of total government external debt), Government Administration, Defense, and Compulsory Social Security (18%), Education Services (16.9%), Construction (13.7%), and Financial and Insurance Services (9.7%). The government’s foreign debt position is relatively safe and under control considering that almost  all of the government’s foreign debt has long-term tenors with a 99.9% share of total government debt. (Bloomberg Technoz)

Recommendation

US10YT is waiting for the interest rate announcement from the Federal Reserve meeting which is scheduled to be decided on March 20 (or Thursday morning at 01.00WIB). Inflation data suggests higher for longer interest rates are still needed. The critical resistance that needs to be overcome is around 4.351% yield, which if broken will open the way to the TARGET yield: 4.56% – 4.66%. ADVISE: WAIT FOR BREAK OUT to buy or average up. Support: yield 4.21% – 4.17%.

ID10YT is also still in a position to wait for the decision of the US central bank and the BI RDG scheduled on March 20 (along with the official election results from the KPU), right at the Resistance yield of 6.652%. ADVISE: WAIT FOR BREAK OUT to buy or average up. TARGET: yield 6.75% / 6.8%. support: yield 6.64% – 6.615%.

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