Today’s Outlook:
US MARKETS: Market participants appeared to be taking more positions in risky assets, with safe-haven Gold and Oil prices down, while monitoring the Israeli war in Gaza, which is still heating up, with high death toll, including many women and children, after efforts to arrange a cease-fire stalled. Philadelphia Fed President Patrick Harker repeated his statement on monetary policy that the central bank may be nearing the end of the interest rate uptrend cycle. The US Dollar and US Treasuries retreated in order following these comments. After yesterday’s Empire State Index explained that the general manufacturing business conditions in New York state tend to worsen. Today, more US economic data will be released such as Retail Sales (Sept.), Industrial & Manufacturing Production (Sept.), and Business & Retail Inventories Ex-Auto for August.
ASIA MARKETS: Japan released its Industrial Production (Aug.) which fell short of expectations and remained in negative territory at -0.7% although this was an improvement from the previous month’s -1.8%. Indonesia reported a much larger decline in Imports than the decline in Exports in September, causing the Trade Balance (Sept.) figure to post another successful surplus for the 41st consecutive month at USD3.42 billion, managing to be higher than forecast & previous month.
EUROPE MARKETS: Speaking of Trade Balance, the Eurozone bagged its 3rd consecutive month of surplus at EUR6.7 billion in August, higher than July’s position at EUR6.3 billion. This afternoon, the UK will release a number of economic data related to employment and Wage growth. In the afternoon, Germany and the Eurozone will publish the ZEW Current Conditions & Economic Sentiment for October.
Corporate News
Summarecon Issues IDR 900 Billion Bonds, Offering Interest of up to 8% Property issuer, PT Summarecon Agung Tbk (SMRA) is carrying out an ongoing public offering of sustainable bonds IV with a target fund to be raised worth IDR 3 trillion. These bonds are offered in two series. First, series A with the amount of series A bonds offered amounting to IDR 468 billion with bond interest of 7.35% per year. The bond term is three years. Bond payments are done in full from the principal of series A bonds on the maturity date. Second, series B bonds with a principal value offered of IDR 432 billion, with an interest rate of 8% per annum. The bond term is five years. Bond payments are made in a full amount of 100% of the series B bond principal on the maturity date. The proceeds from the bond public offering, after deducting issuance costs, will be used approximately 85% to increase the company’s equity participation in PT Summarecon Property Development (SMPD). Furthermore, it will be used by SMPD to increase its equity participation in PT Serpong Cipta Cahaya (SPCC). (Katadata)
Domestic Issue
Government Auctions 7 Series of SUNs Today, Offering Coupons of 6.37% to 7.12% The government, through the Directorate General of Financing and Risk Management of the Ministry of Finance (DJPPR Kemenkeu), conducted an auction of 7 series of Government Bonds (SUN) on Tuesday (17/10/2023) with coupons offered ranging from 6.37% to 7.12%. Meanwhile, the Ministry of Finance set a maximum target of IDR 28.5 trillion, while the indicative target is IDR 19 trillion, in order to meet some of the 2023 State Budget financing targets. The auction opens at 09.00 WIB and closes at 11.00 WIB, while the settlement date is on Thursday, (19/10/2023). Based on the announcement on the official website of the Ministry of Finance’s DJPPR, there are two types of SUN that will be auctioned today, namely State Treasury Notes (SPN) of two series and State Bonds (ON) of five series. In detail, the SPN series to be auctioned are SPN03240117 (New Issuance) which matures on January 17, 2024 and SPN12241017 (New Issuance) which matures on October 17, 2024. Both have a discount coupon rate with a maximum non-competitive purchase allocation of 50 percent of the winning amount. Meanwhile, there are five series of state bonds offered, namely FR0095, FR0100, FR0098, FR0097, and FR0089. (Bisnis)
Recommendation
US10YT returned above MA10 & MA20 Support continuing the Uptrend within the PARALLEL CHANNEL pattern. ADVISE: Average Up accordingly. TARGET / next resistance: previous High level at yield 4.884% or upper channel around 5.0%.
ID10YT yield is proven to rebound at support around 50% Fibonacci retracement in the range of: 6.748% – 6.695%. Currently heading for the nearest Resistance, namely the MA20 and MA10 ranges, in the yield range: 6,886% – 6,933% to try to climb the Uptrend again. ADVISE: Wait & See; Average Up accordingly.
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