Global Market Update
• 10 year U.S. treasury yield ended up rose by nearly 2 bps to 1.33% last night ahead of key inflation data that will be released on Wednesday.
• Jobs and inflation are the major drivers of U.S. treasury yield movement recently. Strong job reports and persistent of high inflation have opened up the possibility of tapering thus fueling yield to rise.
• The number of job openings in the US rose by 590,000 from a month earlier to a series high of 10.073 million in June-21, and well above market expectations of 9.281 million.
• While at the same time U.S. consumer inflation expectation remained robust at 4.8%. Inflation rate in July-21 is expected to rise 5.3% YoY.
• Oil price dropped with Brent crude settled at USD69.04/bbl after losing 2.35% and WTI declined more than 4% to USD65.15/bbl. • U.S. equities closed mixed with DJI traded down 0.3%, S&P 500 fell 0.09% while Nasdaq Composite gained 0.16% last night.
Domestic Market Update
• Indonesia’s consumer confidence plunged 27.2 points to 80.2 in July-21. It was the weakest reading since October-20. Consumer turned to be pessimistic amid stricter social and public health measures to contain Covid-19 infection.
• 10 year Indo GB yield rose by nearly 2 bps to 6.32%, still in line with our expectation and recent rising U.S. treasury yield.
• Rupiah depreciated against USD to 14,363 yesterday. U.S.-Indo spread narrowed to below 500 bps.
Market Projection
• The extension of PPKM level 4, government sharia debt securities auction and retail sales data release will be the sentiment for today’s trading activity (08/10/21).
• We still see there is a potential market correction for today. We expect 10 year Indo GB yield to move within range of 6.30%-6.34%.
• We recommend FR0078, FR0087, FR0091. FR0068, FR0083, FR0092 for trading purpose.
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