Today’s Outlook:
US Treasury yields tumbled after data showing jobless claims jumped to 20-month highs stoked expectations for a Federal Reserve to pause the interest rates next week. Initial Jobless claims unexpectedly rose 28k to 261k, the largest jump since October 2021, pointing to signs of cooling in the labor market. Traders have priced in a 73% chance of the US central bank holding interest rates at the current 5%-5.25% range at the FOMC Meeeting next week, as reported by CME Group FedWatch Tool. However, they see a 50% chance of a rate hike in July. Investors are also on a Waitand-See, waiting for the Inflation data release later on 13 June at the FOMC Meeting. Market expectations expect to see consumer prices slipping again in May, although Core Inflation will not shift much. The CBOE Volatility Index, which measures the concerns of stock market investors, fell to its latest post-pandemic low.
China will announce Inflation data first today, where it is expected that CPI (May) will rise to 0.4%, compared to 0.1% the previous month. The day before, Japan had released 1Q23 GDP figures at a rate of 2.7% YoY. Japan’s economic growth seems to be getting more vibrant on both an annual and quarterly basis. However, this was not the case for the Eurozone, which instead revised 4Q22 and 1Q23 GDP lower, at 1% YoY & -0.1% qoq respectively.
Domestically, Indonesia will release its Foreign Exchange Reserves (May) report today, comparing to April’s position at USD 144.2 billion.
Corporate News
PGN Buyback Bonds Worth IDR 7.43 Trillion PT Perusahaan Gas Negara Tbk (PGN) successfully repurchased debt securities worth USD 499.85 million or equivalent to around IDR 7.43 trillion (exchange rate IDR 14,875). This action is part of the company’s strategic step to manage debt in a more measured, prudent and efficient manner, which will further strengthen the execution of each business plan going forward. The debt securities repaid this time are the remaining principal of Senior Notes due 2024 amounting to USD950 million or equivalent to IDR 14.2 trillion (exchange rate IDR 14,940) for which the tender offer period has expired. After this buyback, the value of PGN’s unabsorbed debt securities remains USD450.14 million. (CNBC Indonesia)
Domestic Issue
ORI023 to be Issued on June 28 The latest series of Retail Government Securities (SBN), the ORI023 series, will soon be issued by the government on June 28, 2023, or 19 days away. Unlike the previous ORI series, for ORI023, the government plans to issue two investment tenor options, namely ORI023T3 or ORI with a 3-year tenor and ORI023T6 or ORI with a 6-year tenor. However, the certainty regarding the two tenors of ORI023 will be conveyed further by the Ministry of Finance. (Bareksa)
Recommendation
US10YT needs to test the MA10 & MA20 Support again, which is now hanging around the 3.70% yield point. A break of this Support will bring the US10YT yield to the next Support in the range of: 3.644-3.613%. On the other hand, if US10YT is able to maintain the yield at this Support then the opportunity towards TARGET 3.848 3.86% or towards 3.96-4.0% will still be wide open. ADVISE: Wait & See; Average Up accordingly.
ID10YT appears to remain comfortable undergoing a Downtrend in the PARALLEL CHANNEL pattern. The yield did not break MA10 & MA20 Resistance in the range of 6.396-6.408%. ADVISE: If the upper channel resistance is able to be broken above the yield of 6.41%, then there is potential for an increase towards TARGET: 6.562% (MA50) or 6.673%. ADVISE: Average Up above yield 6.478%.
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