Menu
The strong domestic consumption growth in the US triggered another sell-off in global bond markets (see Global Economic News). The UST and Bund 10Y yields went up by 13 and 10 bps to 4.83% and 2.88%. Meanwhile, the S&P bond index for developed countries and EMBI for emerging markets fell by (-0.5)% and (-0.4)%. This might push the INDOGB 10Y yield to above 7%, especially with the fact that the yield spread between INDOGB Vs. UST 10Y is getting thinner, coming in at 193 bps. Also, INDON 10Y yield has gone up by 3 bps to 6.07%, close to its highest level over the last four years at 6.17%. In our opinion, the current macro environment might support the inverted bear steepening trend, which could push the UST 10Y yield to 5%, and the INDOGB 10Y yield to 7.2-7.3%. We believe that the 10Y INDOGB yield will go up to 6.8-6.9% today, while Rupiah might depreciate further to IDR 15,700-15,800 per USD. In our view, Rupiah will test its technical resistance at IDR 15,650-15,750 per USD, and If the resistance is broken, Rupiah might depreciate towards IDR 16,000 per USD. We reiterate our recommendation to take a defensive position on corporate bonds and short-term SUNs.
Fixed Income News: Ministry of Finance issued IDR 10.2tn worth of new SUN at yesterday’s auction (10/3: IDR 9.3tn). Despite the increase in new SUN issuance, the level of demand for SUN in the primary market fell to IDR 17tn (10/3: IDR 22.4tn), slightly lower than the lower limit of our projection (IDR 18-22tn). In our opinion, this was mainly caused by the fact that many foreign investors chose to wait for the INDOGB 10Y yield to rise to 7.2%. (DJPPR)
Global Economic News: US retail sales growth fell slightly to 0.7% mom in September, worse than consensus (Aug: 0.8% mom; Cons: 0.3% mom). This fueled market concerns about the probability of another Fed rate hike in December. At the moment, 39% of analysts expect a 1X25 bps Fed rate hike to 5.75% in December (Prev: 30%). This situation has put the inverted bear steepening trend back on track. (Wall Street Journal)
Domestic Economic News BI’s banking survey indicated a higher demand for bank credit. BI’s survey showed that the weighted net balance of corporate financing and new loan distribution rose to 16.1% and 92.6% (Aug: 14.7% & 86.2%). We believe that one of the factors leading to higher demand for credit is BI's macroprudential policy, and bank credit growth in 2023 could stay at 7-9%. (Bank Indonesia)
Recommendation: FR0040, FR0044, FR0056, FR0077.
Samuel Sekuritas Indonesia is a leading Indonesian securities brokerage firm. Established in 1997, the firm has grown to become one of the most respected and trusted financial services companies in the country. With a wide range of services and products, Samuel Sekuritas Indonesia has become a trusted partner to many investors, both institutional and individual.
The company offers a variety of financial services, including equity, debt and derivative securities brokerage services, research and portfolio management, asset management and capital market services, as well as a range of other investment solutions. Samuel Sekuritas Indonesia is also a leader in providing financial education and training, and has established itself as a leading provider of investor relations services.
The company has a strong research capability and is committed to providing its clients with up-to-date and reliable market analysis and recommendations. It also has a team of experienced and knowledgeable professionals who are dedicated to providing quality service to its clients. As a result, Samuel Sekuritas Indonesia has become a preferred partner for many investors in Indonesia.
In addition to its financial services, Samuel Sekuritas Indonesia also offers a range of other services, such as corporate finance and advisory services, mergers and acquisitions, and venture capital.
