Global Market Update
• Preliminary consumer sentiment data release erased yield gained on the last trading date last week (08/13/21).
• The 10 year U.S. treasury yield dropped to 1.283% after dipping 8 bps from the previous day on Thursday (08/12/21).
• The University of Michigan's consumer sentiment for the U.S. slumped to 70.2 in August-21. • Consumer sentiment declined by 11 points from 81.2 in July-21 and well below market expectations of 81.2 according to a preliminary estimate. It was the lowest reading since December-11.
• Overall the 10 year U.S. treasury yield was traded down by 2 bps on a weekly basis after reaching 1.361%, the highest level in a month.
• U.S. equity market continued to strengthen although the appreciation was limited. DJI and Nasdaq Composite added 0.04% respectively, while the broader index, S&P 500 lead after gaining 0.16%.
Domestic Market Update
• Domestic bond market saw a correction last week. ICBI was traded down 0.22%.
• The 10 year Indo GB yield increased by 6.9 bps on a weekly basis reaching to 6.36% in line with our projection.
• External pressure remained low given the further declining of Indonesia risk premium.
• Rupiah continued to depreciate against USD yet still maintaining below 14,400/USD which we believe to remain within its fundamental value.
Market Projection
• Last week drop in U.S. treasury yield could be a positive catalyst for domestic bond price.
• We expect the 10 year Indo GB yield to drop within range of 6.29%-6.34% for today’s trading activity (08/16/21).
• Given the potential price upside we recommend FR0084, FR0086, FR0071, FR0078, FR0087, FR0068, FR0072 and FR0083 for investors trading choice.
