Economists are wary of Core Inflation hitting 3%, indicating inflation has reached producer levels. Although the August Headline Inflation was maintained below 5% on an annual basis, and recorded a deflation of 0.21% on a monthly basis.
Gazprom halted gas supplies to the European Union, raising fears of a European gas crisis. Wall Street closed lower by more than 1%, after early trading rose significantly in response to the Aug. Unemployment Rate which rose to 3.7% (Vs. Jul. 3.5%).
SUN benchmark mixed, amid positive domestic economic data. Controlled inflation and continued expansion of manufacturing were positive catalysts for the government securities market.
Employment and manufacturing data are solid, leaving more room for FFR gains. US weekly Initial Jobless Claims Aug. fell 5,000 to 232,000, in the week ending on Aug. 27, much lower than the consensus of 248,000.
The tug-of-war policy on subsidized fuel prices, the SUN market closed mixed. Investors are beginning to observe the positive impact of shifting fuel subsidies to more productive sectors.
The private sector workforce is growing conservatively, amid a potential slowdown in the US economy. Automatic Data Processing Employment Change AS Aug. recorded that the private sector only absorbed 132K (Vs. Surv. 300K; Jul. 268K).
Attractive coupons, investors are interested in FR96 and FR97. The two series of 10-year and 20-year benchmark candidates recorded bids of up to IDR 17.8 trillion and IDR 9.3 trillion, surpassing the other series between IDR 1.2 trillion to IDR 6.5 trillion in yesterday’s SUN auction.
Investors ignores that Consumer Confidence exceeds expectations. Wall Street closed lower for the third day in a row, continuing the fear that the Fed would continue to be aggressively Hawkish in order to combat persistently high annual inflation.
Rupiah depreciated as DXY strengthened towards the 109 level. The benchmark 10-year SUN recorded a yield increase of more than 10 bps. Yesterday’s market movement, amid the rupiah exchange rate which is approaching the level of IDR14,900/USD.
