Today’s Outlook:

US MARKETS: The US Dollar turned slightly higher after investors assessed US consumer sentiment readings and sifted through comments from Fed officials. The University of Michigan’s preliminary reading of consumer sentiment came in at 67.4 for May, a six-month low and below the 76.0 estimate of economists polled by Reuters. In addition, the one-year inflation expectation climbed to 3.5% from 3.2%. The dollar index, which measures the U.S. currency against a basket of six peers, gained 0.07% to 105.29. The euro slid 0.1% to USD 1.077, while the yen weakened 0.17% to 155.74 per dollar. The pound posted a modest weekly loss after the Bank of England on Thursday paved the way for the start of rate cuts as soon as next month and data showed the British economy exited a mild recession in the first quarter of this year. Markets await both next week’s PPI and the CPI for signs that U.S. inflation has resumed its downward trend toward the Fed’s 2% target rate. Hotter-than expected inflation reports last month had quashed any lingering expectations of near-term U.S. rate cuts. But markets are now fully pricing in a cut only in November, while chances of the Fed moving in September have narrowed. Treasury yields rose as traders waited on next week’s key April inflation data to guide expectations of Fed monetary policy. The yield on benchmark 10-year Treasury notes rose 5.1 basis points to 4.5%, while the two-year yield, which typically moves in step with interest rate expectations, rose 6.3 basis points to 4.8698%.

EUROPEAN MARKETS: In contrast, markets now imply a 50-50 chance of a BANK OF ENGLAND rate cut in June and are almost fully priced-in for August. They also imply an 88% chance that the EUROPEAN CENTRAL BANK will ease monetary policy in June. BOE Governor Andrew Bailey said that there may be more reductions than investors expect; this is the latest sign of the growing divergence between the European and US interest rate outlook. Investors are currently anticipating around 42 bps of pivots this year from the Fed. In comparison, traders expect a 55 bps easing from the BoE this year, while anticipating a 68 bps cut from the ECB.

COMMODITIES: OIL prices fell about USD 1 per barrel as comments from Fed officials indicated higher interest rates for a longer period of time, which could hamper demand from the world’s largest crude consumer. US WTI crude futures fell USD 1.00 to USD 78.26 per barrel and BRENT fell USD 1.09 to USD 82.79 per barrel. GOLD prices rose, heading for its best week in five, with bullion building momentum fueled by weaker US jobs data last week that strengthened expectations for the Federal Reserve to cut interest rates this year. US Gold Futures for June delivery closed 1.5% higher at USD 2,375.00 an ounce.

Corporate News
Timah (TINS) Loses, Facing a Bonds-Sukuk Maturity of IDR 806 B The performance of PT Timah Tbk (TINS), which suffered a loss of IDR 449 billion in the 2023 financial year and bonds and sukuk that will mature in 2024, is a strong reason for the company not to distribute dividends this year. Based on data from the Indonesian Central Securities Depository (KSEI), the issuer coded TINS shares will face maturing bonds and Sukuk with a total value of Rp 806 billion in August. The maturing bonds come from the Sustainable Bonds I Timah Phase II Year 2019 Series B. Meanwhile, the Sukuk comes from the Sustainable Sukuk Ijarah I Timah Phase II Year 2019 with an interest rate of 8.75% each. President Director of PT Timah Tbk Ahmad Dani Virsal revealed that the company’s performance in fiscal year 2023 has provided many new insights, especially to improve performance in the following years. (Bisnis)

Domestic Issue
2024, IDX Records Total Bond and Sukuk Issuance of Almost IDR 40 T The Indonesia Stock Exchange (IDX) recorded total bond and sukuk issuances throughout 2024 or until this May amounting to IDR 39.68 trillion. This figure comes from 37 emissions from 27 issuers listed so far this year. Thus, the total bond and sukuk emissions recorded on the IDX currently amount to 552 emissions with a total nominal outstanding value of IDR 461.84 trillion and USD 46.1 million issued by 130 issuers, based on an official IDX statement. Meanwhile, Government Securities (SBN) were recorded at 186 series with a nominal value of IDR 5,986.87 trillion and USD 501.10 million. Meanwhile, the total EBA emissions were recorded at 10 with a total nominal value of IDR 3.05 trillion. At the beginning of last week, the IDX itself recorded 1 bond, 1 sukuk, and 2 new stocks. (Bloomberg Technoz)


US10YT awaits the trigger of US CPI & PPI figures to determine if a technical rebound can be created in the lower channel support area – current uptrend. Nearest resistance: MA10 / yield 4.5%. A break of that level will bring the US10YT yield back up towards the TARGET: MA20 / yield 4.57%, or yield 4.66% – 4.70%.

ID10YT stopped its technical rebound at MA10 resistance or close to 7.10% yield. ADVISE : wait for breakout direction before deciding positioning. Support: MA20 at yield 6.99% – 7.0% psychological support level.

Download full report HERE.