Global Market Update
• The U.S. treasury yields moved 1-3 bps lower along the curve in the first trading day this week.
• The benchmark 10 year U.S. treasury yield dropped nearly 3 bps to 1.28% on Monday (08/30/21).
• Pending home sales in the U.S. were downed by 8.5% YoY in July-21. This was the second consecutive month of drop amid limited supply.
• Now investors eye on the upcoming data such as consumer confidence, ISM manufacturing activity as well as job report in this week.
• Economist polled by Dow Jones expect 750,000 jobs were created in August-21 making the unemployment rate to fall to 5.2%.
• Some Fed’s officials expect the announcement of tapering could come soon as the Fed’s Sept. 21-22 meeting.
• U.S. equity market closed mixed with DJI underperformed by 0.19% while S&P 500 and Nasdaq hit another all time high after gaining each 0.43% and 0.9%.
• Elsewhere, the economic sentiment indicator in the Euro Area dropped to 117.5 in August-21 from an all time high of 119 in the previous month and below consensus expectation at 117.9. The lower sentiment was deteriorated by concerns over Delta variant widespread.
Domestic Market Update
• The domestic bond market continued to edge higher on the first trading day this week. ICBI settled at 327.18 after gaining 0.1%. Both corporate and government bond prices saw an appreciation.
• The 10 year Indo GB yield dropped 5 bps to 6.12% yesterday or equivalent to its - 1STD fair yield valuation.
• JCI index gained 1.71% while rupiah strengthened against USD to below IDR 14.400/USD along with the declines in 5-year CDS.
• The domestic capital market was appreciated despite the possible tapering off by the end of this year yet the Fed has pledged that the interest rates won’t be hike up until a more stringent test is undertaken.
Market Projection
• Today’s market sentiment is coming from the government bond auction that target to raise fund worth of IDR21tn. The indicative target was set lower due to burden sharing program between government and central bank.
• We expect with the lower target and the probability of remain high investors appetite, today’s auction to be successful as before.
• Given the U.S. treasury yield limited movement, the 10 year Indo GB yield will likely to move within range of 6.10%-6.20%.
• The attractive government bond series to be traded are : FR0086, FR0090, FR0082, FR0087, FR0068, FR0083 and FR0076.
Disclaimer
