US Treasury yields rose for a third consecutive session, it gained 2.6 bps to 3.544% (from 3.518 las Friday) ahead of central bank monetary policy announcement and a number of important macroeconomic data from various parts of thr world, such as: the continental Europe (Eurozone 4Q22 figures, CPI and Unemployment Change of French & German), China (Jan. Manufacturing PMI), US (Jan. Consumer Confidence). Germany’s 4Q22 GDP has begun this series of economic data announcements by coming in at 0.5% YoY (vs. 0.8% forecast, vs. 1.3% previous) and contracting -0.2% QoQ (lower than the last quarter’s 0.5%), indicating an apparent economic slowdown. The market is focusing on the final decision of the Federal Open Market Committee Meeting, which will be held from January 31 – February 1, to raise the Fed Fund Rate (FFR) by 25 bps that would bring the policy rate to the 4.5%-4.75% range; while the Bank of England and European Central Bank, both of which are primarily expected to hike by 50 bps. Moreover, the market anticipates rates to peak at about 4.9% in June before retreating to 4.5% by year-end.

Corporate News
Barito Pacific Bonds Receive idA+ Rating. Indonesia Credit Rating Agency (Pefindo) affirmed the idA+ rating of Batito Pacific’s (BRPT) bonds worth IDR227.48 billion. The Sustainable Bonds I Barito Pacific Phase II Year 2020 Series A, will mature on April 1, 2023. Barito Pacific plans to pay off the maturing bonds with internal funds. Meanwhile, debt securities with an idA rating indicate that the issuer’s ability to fulfill long-term financial commitments on these debt securities, compared to other issuers in Indonesia, is strong. (Emiten News)

Domestic Issue
The Indonesian government bond market or Government Securities (SBN) is still attractive for foreign investors, even though yields have increased in the past week. Based on Bank Indonesia’s data, foreigners recorded a net buy or inflow in SBN of IDR 3.63 trillion throughout the last week. As for January 2023, foreign recorded a sizable inflow in SBN of IDR 48.08 trillion. In the past week, the yield on the 10-year SBN, which is the benchmark SBN, jumped 9.3 basis points (bp) to 6.727% as of last Friday, from the previous Friday at 6.634%. (CNBC INDONESIA).

ID10YT yield broke Parallel Channel (downtrend) thus opening up strengthening potential until the following resistance/TARGET areas: 7.05/7.20/7.35. ADVISE: Average Up above MA50/6.88. US10YT seems to be unsettled passing the Neckline of the bullish reversal Inverted Head & Shoulders pattern at the 3.55 level (up to 3.58 = crucial MA50 resistance = could be an Average Up point later too). It seems to be waiting for the FOMC Meeting decision as a trigger for decision making on which breakout direction to choose. ADVISE: Buy on Break, or Average Up accordingly.

Download full report HERE.