Today’s Outlook:
US MARKETS: The latest Initial Jobless Claims data explained that the number of Americans filing jobless claims in the latest week remained stable at 208k as well as the previous week, while in fact lower than the forecast of 212k, so the labor market is considered still quite tight. The focus of market participants now turns to the closely watched April Nonfarm Payrolls report on Friday, which is expected to show a possible increase of 243,000 jobs in April after rising by 303,000 in March. This labor market data comes in the same week that the Federal Reserve kept interest rates unchanged at the end of Wednesday’s FOMC Meeting, and Powell signaled that the next interest rate move would likely be a rate cut. By ruling out the possibility of a rate hike this year, the Fed Chairman gave market participants some relief although mixed market attitudes emerged after the statement. Goldman Sachs remains confident of two rate cuts this year, while Macquarie seems to be more pessimistic about it although they are still factoring in a possible pivot this year.
Other ECONOMIC INDICATORS that may color market sentiment are the Average Hourly Wage (Apr.) and US Unemployment Rate (Apr.) which are both still at 3.8%, as well as the S&P Global Composite PMI (Apr.) data set where it is expected that the US will be able to stay above 50 for the services sector, as well as the ISM Non-Manufacturing PMI (Apr.) prediction which is stronger in expansionary territory.
ASIA & EUROPE MARKETS: SOUTH KOREA and INDONESIA both released Inflation figures that cooled below estimates: South Korea reported CPI (Apr.) at 2.9% yoy, managing to decrease even below expectations of 3.0%. Similarly, Indonesia recorded April CPI at 3.0% yoy, also lower than the forecast of 3.06% and the previous month’s 3.05%; although on a monthly basis slightly higher than expected due to the high transportation costs during the Lebaran homecoming period. Speaking of PMI, both countries recorded declining performance in the manufacturing sector although Indonesia is still in expansionary territory, in contrast to South Korea which is still struggling to get out of contractionary territory. In line with them, GERMANY & EUROZONE have also presented their Manufacturing PMI figures which despite performing above predictions, are still yet to touch the 50 mark. Today, the UK will update their Composite PMI & Services PMI for April, which is expected to remain safely in expansionary territory.
COMMODITIES: OIL prices neared a seven-week low on Thursday, closing in a narrow range as both benchmarks came under pressure from weak global demand, rising US inventories, and fading hopes for a quick US rate cut. US West Texas Intermediate (WTI) crude futures fell 5 cents to USD 78.95/barrel, the lowest since March 12; while BRENT also briefly hit its lowest point since early March, before rebounding from intraday lows to close 0.3%, higher at USD 83.67/barrel. Oil traders are increasingly concerned about a possible economic slowdown in the US, while on the other hand the Israel – Hamas war continues without having a major impact on disrupting Middle East oil supplies. A day earlier, oil prices fell more than 3% on Wednesday after the US government reported a surprise surge in crude stockpiles and the Fed kept interest rates unchanged due to stubborn inflation. In other commodities, spot GOLD prices edged up 0.3% at the close of trading on Thursday to USD 2325.02/ounce. The price of this commodity rallied 2 days in a row after the Federal Reserve showed an inclination towards future interest rate cuts.
Corporate News
Sarana Multigriya Finansial (SMF) Ready to Pay Off Maturing Bonds IDR 598 Billion PT Sarana Multigriya Finansial (Persero) (SMF) is known to be paying off maturing bonds worth IDR 598 billion using internal funds. Quoted from an official statement released by PT Pemeringkat Efek Indonesia (Pefindo), Thursday, May 2, 2024, debt securities issued by PT Sarana Multigriya Finansial (Persero) (SMF), namely Sustainable Bonds VI Phase I Year 2021 Series A (idAAA rating) worth IDR 200.0 billion will mature on July 8, 2024. In addition, Sustainable Bond VII Phase I Year 2023 Series A (idAAA rating) worth IDR 398.0 billion will mature on July 22, 2024. According to Pefindo, the company plans to pay off the bonds using internal funds, with cash and cash equivalents recorded at IDR 2.8 trillion at the end of December 2023. (Media Asuransi)
Domestic Issue
One Week Offered, ST012 Sales Reach IDR 3.49 Trillion Since the offering on Friday (26/4), the ST012 series Savings Sukuk has been sought after by investors. As of Thursday (2/5), ST012 absorption has reached 49.85% of the IDR 10 trillion target. The Directorate General of Financing and Risk Management of the Ministry of Finance launched ST012 in two series. Namely, ST012-T2 (2-year tenor) with a coupon of 6.40%, and ST012-T4 (4-year tenor) with a coupon of 6.55% per year. According to one of the distribution partners, PT Bibit Tumbuh Bersama (Bibit), as of Thursday (2/5) at 20.56 WIB, ST012 sales have reached IDR 3.49 trillion from both series. Interest in both series is also quite mixed. ST012-T2 has sold around IDR 2.52 trillion or reached 36.09% of the initial target of IDR 7 trillion. As a result, the ST012-T2 purchase quota leaves IDR 4.47 trillion. Meanwhile, ST012-T4 has sold around IDR 969.96 billion or equivalent to 32.33% of the initial target of IDR 3 trillion. That way, the ST012-T4 quota leaves IDR 2.03 trillion. (Kontan)
Recommendation
US10YT finally started to break MA10 & MA20 Support to below 4.585% yield (The nearest Resistance at the moment) thus opening up opportunities for further decline towards the next Support at 4.50% yield or even 4.40%. However, overall US10YT is still moving in an upward trend so any weakness can be looked at as an opportunity to BUY ON WEAKNESS.
On the other hand, ID10YT has also started to reverse down from the steep rise that brought it to a 6-month high at 7.30% yield, moving towards the nearest Support: MA10 / yield 7.115%. If this level does not hold then ID10YT yield needs further consolidation towards MA20 / 6.93% up to 7.0% psychological level. ADVISE : prepare to reduce position.
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