Global Market Update
• U.S. strong job market data backed the idea of the Fed’s substantial progress in economic recovery.
• U.S. Non Farm Payrolls added 943,000 in July-21, well above consensus estimate at 870,000.
• Unemployment rate dropped to 5.4% or lower than the market forecast of 5.7%.
• The Fed is expected to begin to pullback the stimulus by the end of this year.
• 10 year U.S. treasury yield rose to 1.31% or increased by 8 bps from previous trading day.
• The stock market response varied with tech-heavy Nasdaq Composite declined by 0.4% while DJI and S&P 500 rose 0.41% and 0.17% respectively.
Domestic Market Update
• Domestic bond market saw a correction on the last day of trading with ICBI closed lower to 324.36 (-0.08%).
• 10 year Indo GB declined by 2 bps to 6.3% or 5 bps higher than -1STD of its fair yield valuation.
• Rupiah closed lower to 14,353 against USD in the last session while risk premium increased to a near of 80 bps, yet U.S.-Indo spread dropped to 499 bps.
Market Projection
• Today (08/09/21) market is waiting for Consumer Confidence Index (CCI) data to be released and government decision for PPKM Level 4 announcement.
• We expect CCI will decelerate and government to extend PPKM Level 4 in hot zone area while carefully loosening area which Covid-19 epidemiological indicators showed an improvement at least for another week.
• Combined with rising U.S. treasury yield, 10 year Indo GB will likely to rise within range of 6.28%-6.32% today.
• Given the potential of market correction today, we like FR0086, FR0071, FR0087, FR0083, FR0057, FR0067, FR0076 and FR0089
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