US MARKETS: The U.S. Federal Reserve kept interest rates unchanged at 5.25%-5.50% (as per market expectations) in two consecutive meetings, and comments from its top official fueled investor optimism rate hikes were done even though the central bank left the door open for more, especially after several recent indicators showed that economic activity expanded at a strong pace in the third quarter. Fed Chair Jerome Powell said policy makers would proceed carefully although they were not yet confident financial conditions were restrictive enough to get inflation as low as the central bank would like at 2%.
The falling US Treasury yields happened after the US Treasury Department said it will slow the pace of increases in its longer-dated debt auctions in the November January quarter and expects it will need one more additional quarter of increases after this to meet its financing needs. The 2-year US Treasury yield, the most sensitive to Fed policy, fell 12.5 basis points to 4.93%, the lowest level since September.
US ECONOMIC DATA: The October ADP private sector payrolls came in at a lower than the expected 113,000 though still stronger than the September reading’s 89k. In a sign that labor demand remains healthy, however, the September JOLTS job openings topped economists estimates by coming in at 9.553 million, which figure topped both forecasts and the previous month. The two data come ahead of Friday’s jobs report which will give the Fed and investors a new detailed reading on the state of the still-tight labor market. Investors will also keep an eye on the country’s future refinancing plans, with yields close to historic highs, even after the Treasury forecasted a lower fourth-quarter borrowing need than previously flagged.
ASIA & EUROPE MARKETS: Data showed South Korea’s exports increased in October by 5.1% yoy, the first growth in 13 months, but its factory activity contracted slightly more significantly. Separately, China’s Caixin/S&P Global Manufacturing PMI fell to 49.5 in October from 50.6 in September, marking the first contraction since July and failing to meet analysts’ expectations for expansion at 50.8. As for sentiment in Europe, it was boosted by news on Tuesday that Eurozone Inflation fell to the lowest level in two years in October. Speaking of Inflation, this morning South Korea reported CPI (Oct.) at 3.8% yoy, up from both the forecast and the previous month.
INDONESIA MARKETS: INDONESIA released October’s annual inflation data which rose to 2.56% yoy from September’s 19-month low of 2.28%, slightly lower than the market consensus of 2.6%; and remained within the central bank’s target of 2-4% for the sixth consecutive month. On a monthly basis, consumer prices rose 0.17% mom in October, following a 0.19% increase in September, although still below market estimates of 0.24% growth. Indonesia’s S&P Global Manufacturing PMI fell to 51.5 in October from 52.3 in September. This was the 26th consecutive month of expansion in factory activity, but the slowest pace since February, amid weakening new order growth and falling export sales, while output growth was the lowest in 4 months. The Rupiah’s unwillingness to strengthen from above the IDR15,900 level hardly helped to bring positive catalysts to the equity market movement yesterday. Further today, a number of important ECONOMIC DATA across the world are being watched by market participants: German Manufacturing PMI (Oct.) & Unemployment Change (Oct.), Eurozone Manufacturing PMI (Oct.), Bank of England rate decision, US Initial Jobless Claims, US Nonfarm Productivity (Q3), US Unit Labor Costs (Q3), and Factory Orders (Sept.).
Adhi Karya Ready to Pay IDR 289 Billion Bond Debt, Due in November State-owned construction company PT Adhi Karya (Persero) Tbk (ADHI) is ready to pay the principal of the 2020 Adhi Phase I Sustainable Bonds III worth IDR 289.6 billion, which will mature on November 18, 2023. ADHI Director of Finance and Risk Management Bambang Krisminarno said that the funds will be available at the maturity date, which according to the provisions has a deadline on November 16. Previously, PT Pemeringkat Efek Indonesia (Pefindo) had given an idA- rating to ADHI’s bonds, which will mature in November 2023. (Bisnis)
Sri Mulyani Auctions Bonds Again Next Week, Seeking IDR 9 Trillion Funds The government will again auction debt securities, they will hold an auction of Sovereign Sharia Securities (SBSN) or State Sukuk on Tuesday, November 7, 2023. Quoting the official statement of the Directorate General of Financing and Risk Management of the Ministry of Finance, Wednesday (1/11/2023) stated that the SBSN series to be auctioned are the SPN-S series (State Treasury Securities – Sharia) and PBS (Project Based Sukuk) to meet part of the financing target in the 2023 State Budget. SBSN auction has an indicative target of IDR 9 trillion with a settlement date of November 9, 2023. The SBSN series to be auctioned are as follows: SPN-S 07052024 (new issuance) maturity date May 7, 2024, PBS036 (reopening) maturity date August 15, 2025, PBS003 (reopening) maturity date January 15, 2027, PBS037 (reopening) maturity date March 15, 2036, PBS034 (reopening) maturity date June 15, 2039 and PBS033 (reopening) maturity date June 15, 2047. The non-competitive purchase allocation is 50% of the amount won for the SPN-S 07052024 series while the other series are 30% of the amount won. (Suara)
US10YT suddenly fell to lower channel support at 4.71% yield after THE FED kept interest rates unchanged, but in fact it has not disturbed the medium-term uptrend. ADVISE: HOLD; Wait & See. The nearest resistance is the MA20 & MA10 in the yield range: 4.79% – 4.85%.
ID10YT began to waver in relying on MA10 and is currently trying to climb back above the yield of 7.159%. Although the actual ID10YT uptrend is still relatively intact within the PARALLEL CHANNEL pattern (green), the yield consolidation may continue until the following support: MA20 / 7.085%, or even lower at the lower channel support around 6.93% yield. ADVISE : reduce position.
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