IDR: USDIDR Nears Key EMA, Flat for the Week

Bitcoin had a range overnight of $98 913.02k - $104 910k, Asia is currently trading around $101 100k, +0.75%. Bitcoin took another leg lower overnight down over 7% on the day as the Crypto space seems to be struggling with a resurgent Dollar and a reversal in the risk backdrop. The Bitcoin support area between $95k-$107k is being tested and should provide those wanting to express a long a good opportunity to fade if that's your way. A break below $90k-$95k though would potentially signal a deeper correction is underway, this scenario would make a few of those treasury companies holding bitcoin on their balance sheet nervous, there are reports that some of these have already started paring back positioning.

• _Checkmate on X pointed out that “ Treasury Companies are starting to sell their coins. This is good to see. The forest fire of bad ideas needs to sweep through and clear out all of this dead wood.” - https://sequans.com/sequans-redeems-50-of-convertible-debt-through-strategic-asset-reallocation/
• Vijay Boyapati agreed with the sentiment “I've been warning about this all year (see various pods I've been on). Most Treasuries will face shareholder pressure to sell BTC and buy their shares when their mNAV dips meaningfully below 1. Saylor is probably the one exception, but even he may face legal pressure.”

Fig 1: Bitcoin spot Daily Chart

Source: MNI - Market News/Bloomberg Finance L.P

Cash ACGBs are 5–7bps richer on the day, while the AU–US 10-year yield differential is little changed at +24bps.

• At this level, the spread remains near the upper end of the ±30bps range that has persisted since November 2022.
• A simple regression of the 10-year yield differential against the AU-US 1-year forward 3-month swap rate (1Y3M) differential over the past two years suggests the current spread is close to fair value.
• The 1Y3M differential, a key gauge of expected relative policy trajectories over the next 12 months, has increased around 75bps since June to be around the same level as October 2024.

Figure 1: AU-US Cash 10-Year Yield Differential (%)

Source: Bloomberg Finance LP / MNI

Overnight moves in Treasuries spilled over into Asia today with bond futures stronger and yields lower.  The 10-Yr bond future is up +08 at 113-01+ taking it near to the 20-day EMA of 113-02+.  It has traded below since just prior to the last FED where for some observers, the December rate cut became uncertain.  The boost for bonds overnight came from the weakening in equities on profit taking.

Cash has opened up very strong with yields across the curve -3 - 3.5bps lower.  The 2s10s curve has flattened modestly.  

• The 2-Yr is at 3.549 (-2.9bps)
• The 5-Yr is at 3.663% (-3.5bps)
• The 10-yr is at 4.054% (-3.1bps)
• The 30-Yr is at 4.642% (-2.4bps)

Equity weakness is a key theme for markets today with major markets down and recent star performers like the KOSPI and NIKKEI down over 4% as the tech sector is hit hard.  The warning from the Korea Exchange yesterday on SK Hynix was an indicator as to how far these tech stocks have run and were long overdue a correction.