The dollar falls to a nine-month low and Treasury yields ease after the Federal Reserve signals the end is near for the current rate hiking cycle, after raising the benchmark interest rate by 25 bps to 4.50%-4.75%. However, Chair Jerome Powell still said it was “premature” to declare victory over inflation, but acknowledged that a “disinflationary trend” has started. The dollar index fell to a low of 100.675 before recovering, while two-year Treasury yields fell as low as 4.09%. ECB & BOE raised their benchmark rates by 50bps to 3% and 4%, respectively, with the Bank of England signaling the tide was turning against inflation and the ECB indicating at least one more hike was on the horizon. US economic data showed weekly Initial Jobless Claims dropped to a nine-month low of 183K (vs. forecast: 200K & vs. previous: 186K), showing the labor market remains strong, while worker productivity in the fourth quarter accelerated based on Nonfarm Productivity data at 3% (higher than forecast: 2.4% & previous: 1.4%).
BJB Again Offers SBR012 Retail SBN. Bank BJB participated in offering SBR012 Retail Savings Bond to support the government in increasing funding for the State Budget (APBN). Unlike the previous Retail SBN series, SBR012 is issued with two tenors, SBR012-T2 for a 2-year tenor and SBR012-T4 for a 4-year tenor. SBR012 is offered with a floating coupon of 6.15% p.a for SBR012- T2 and 6.35% p.a for SBR012-T4. This coupon value will be adjusted according to the BI 7-Day Reverse Repo Rate. However, a minimum coupon (floating with floor) applies to ensure the investment up until the end. (Emiten News)
Banking Interest in Issuing Bonds is Still Appreciable Interest in banks to issue bonds is still quite high this year. However, bankers are still calculating liquidity and the direction of the benchmark interest rate movement which will affect bond coupons. Indeed, Bank Indonesia (BI) ensures that banking liquidity will remain adequate in 2023. The banking liquidity ratio based on the loan to deposit ratio (LDR) was at the level of 80.94% as of October 2022. (Kontan)
ID10YT yield is testing support from the previous low 6,624 up to 6,604 as the last tolerance. The hope of technical rebound in the near future is signaled by RSI positive divergence; however our ADVISE is to better wait for confirmation of rebound at this support area as the current position is still very speculative. Failure to hold this support area will result in ID10YT yield sliding downwards looking for the next support around 6.45 yield. US10YT yield failed to initiate a technical rebound even though a long-leg Hammer candle has appeared right at the support area, and now it has started to break the 3.393 mid-term support. Yield should be immediately corrected to above 3.4; or risk further downside to 3.368-3.321 as last tolerance before testing lower Wedge support around 3.25. ADVISE: Hold, Buy on Weakness.
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