Global Market Update
• U.S. recorded a trade deficit of USD75.7bn in June-21. Initial jobless claims as of the end of Jul-21 were 385,000 or slightly in line with consensus estimate but lower than previous month at 399,000.
• 10 year U.S. treasury yield hiked 4 bps to 1.22% on Thursday (08/05/21). However yield remained below its position in the last week at 1.27%.
• July-21 jobs report has boosted U.S. equity market performance with DJI rose 0.78%, S&P 500 added 0.6% while Nasdaq Composite jumped 0.78%.
• Elsewhere, BoE left monetary policy unchanged during its August-21 meeting, with policymakers reiterating that they do not intend to tighten monetary policy at least until there is clear evidence that significant progress is being made in achieving the 2% inflation target sustainably.
• Global monetary stance stayed accommodative so far although there is an upside risk of inflation in U.S. This helped yield to remain low.
Domestic Market Update
• Indonesia 2Q21 GDP expanded 7.07% YoY or higher than consensus estimate and our projection at 6.72% YoY and 6.95% YoY respectively.
• The 2Q21 expansionary figure was driven by improving global condition that boosted trade, gradual recovery of consumption and investment as well as low based effect.
• ICBI declined by 0.03% to 324.62 yesterday. 10 year Indo GB yield closed nearly 2 bps higher to 6.28% at the same time.
• Rupiah weakened to 14,343/USD. US-Indo spread recorded at 506 bps.
Market Projection
• We see there will be another correction in the market today that pushes yield to go up, although we still believe the upward pressure to remain low considering U.S. treasury note still traded within its lowest yield range in the last 5-month.
• We expect 10 year Indo GB yield to move within range of 6.25%-6.30% today. We like FR0086, FR0071, FR0087, FR0068, FR0083, FR0076 and FR0089.
