Today’s Outlook:
US MARKETS: Market participants also digested statements from US President Joe Biden, who continued to voice the idea of a Gaza War ceasefire to Israeli Prime Minister Benjamin Netanyahu; which lifted Oil prices due to this increased geopolitical tension. Fed officials are clamoring for a more hawkish tone in determining this year’s rate cut decision, even the most extreme heard is that if the US Inflation rate doesn’t come down from current levels then maybe the pivot doesn’t need to materialize. The sentiment extinguished the market gains that had previously occurred on the back of US Initial Jobless Claims data that increased above expectations. The number of Americans filing jobless claims rose by 9k to 221k for the week ending March 30th; this was above the estimate of 214k and suggests the labor market is easing. Although this is one data that supports the view of a rate cut this year, investors are still expected to be somewhat nervous waiting for the pre-Nonfarm Payroll report this Friday at around 19.30 WIB which is predicted to spawn a figure of 212 thousand for March, lower than 275 thousand in February. The US Unemployment Rate is also not expected to budge from 3.9%, while the increase in average hourly wages is expected to rise by 0.3% mom in March, so higher than 0.1% in the previous month. In light of all this, there is still a 60% chance of the first rate cut happening in June, according to the CME Group FedWatch Tool survey. GEOPOLITICAL TENSIONS IN THE MIDDLE EAST also seem to be escalating. Both Israel and Iran have vowed to fight each other and retaliate against each other’s attacks.
COMMODITIES: Based on the two sentiments above: as the prospect of another interest rate cut became unclear and the Gaza War escalated, coupled with the worst earthquake in 25 years in Taiwan, this inevitably sent the spot price of GOLD as a safe-haven asset crawling up to a new record point, briefly touching USD 2302.58/ounce before closing at USD 2292.19/ounce. Even the June contract price ended higher at USD 2312.15, after touching a new high of USD 2322.25/ounce earlier this week. Even after this all-time-high price, analysts estimate that Gold still has the potential to rise further towards USD 2400 – 2500 / ounce this year. OIL prices were also on fire, with BRENT futures for June closing up 1.5% to above USD 90/barrel for the first time since October, while US WTI futures for May closed up 1.4% at USD 86.59/barrel. Both benchmark prices are at their highest point since October and continue to advance after market, driven by sentiment of escalating Middle East conflict and potential global supply constraints; after last week OPEC+ including Russia had agreed to maintain their previously reduced production levels in Q2.
EUROPEAN & ASIAN MARKETS: GERMANY and EUROZONE report their Composite PMI & Services PMI moving further towards expansion, UK also managed to keep their PMI in the same region. Eurozone reported PPI (Feb.) which is still suffering from -8.3% yoy deflation, worsening from -8.0% in January. Today will see the health of the property sector in relation to Construction PMI in the UK, along with Factory Orders and also Construction PMI from Germany; not forgetting Retail Sales from the Eurozone. For the ASIA region, JAPAN has this morning announced that their household spending managed to increase significantly for February, rising to a positive 1.4% mom exceeding expectations, and moving from the previous month’s negative -2.1% level. On an annualized basis, Household Spending which was -6.3% in January, the pace of decline was greatly reduced to a mere -0.5% yoy in February.
INDONESIAN MARKETS: Investors in INDONESIA will be monitoring the Foreign Exchange Reserves (Mar.) figure on the last trading day before the long Eid holiday, compared to the previous position of USD 144 billion in February.
Corporate News
BNI Global Bond Oversubscribed 6.4 Times, Proof of High Investor Confidence PT Bank Negara Indonesia (Persero) Tbk or BNI made a brilliant achievement in the issuance of global bonds worth USD 500 million or equivalent to IDR 7.9 trillion. The bonds, which are part of the Euro Medium Term Note (EMTN) issuance, were oversubscribed up to 6.4 times during the initial pricing guidance (IPG). BNI Finance Director Novita Widya Anggraini revealed that the high investor interest in BNI’s Global Bond reflects investor confidence in the company’s fundamentals and prospects. The issuance of this Global Bond is part of BNI’s strategy to diversify funding sources and support the company’s strategic steps in increasing business growth, not only in rupiah but also foreign exchange (forex). He explained, BNI Global Bond is part of the EMTN which was formed on May 6, 2020 and has been renewed on March 22, 2021 and March 26, 2024. This EMTN program allows BNI to issue debt securities in stages with a maximum principal amount of USD 2 billion. The company completed the roadshow on March 26, 2024 and pricing on March 27, 2024. The bond interest is set at 5.28% per year, showing the level of investor confidence in BNI. (Liputan 6)
Domestic Issue
IDR 21.35 Trillion Sold, SR020 Successfully Invites 32,861 Millennial Investors After the end of the offering period from March 1-27, 2024, on Monday, April 1, 2024, the Director General of Financing and Risk Management on behalf of the Minister of Finance determined the results of the sale of Retail Sukuk series SR020T3 (3 Year Tenor) and SR020T5 series (5 Year Tenor). The total purchase order volume of SR020T3 and SR020T5 that has been determined is IDR 21,359,250,000,000. The SR020T3 and SR020T5 series Retail Sukuk uses the Ijarah Asset to be Leased contract, using State Property (BMN) and the 2024 State Budget Project as the underlying asset. Retail Sukuk SR020T3 series (3 Year Tenor) offers a fixed coupon rate of 6.30% per year and SR020T5 series (5 Year Tenor) of 6.40% per year. Evidently, public interest is quite high to invest in SR020. Public enthusiasm can also be seen from the participation in educational activities carried out both offline and online throughout the SR020 offering period. (Emiten News)
Recommendation
US10YT gave up its upside potential by failing to break the Resistance yield of 4.351% as the Initial Jobless Claims data was higher than expected, leaving US10YT to test its Support at the three Moving Averages around the yield: 4.262% – 4.209%. ADVISE: HOLD; WAIT & SEE.
ID10YT is still consolidating in a Bullish Flag-like pattern, waiting for the right moment to rebound from MA10 & MA20 Support around the range: yield 6.685% – 6.666%. ADVISE: BUY ON WEAKNESS; Average Up > yield 6.73% – 6.74%.
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