Global Market Update
• U.S. 10 year treasury yield closed higher to 1.28% in July 23, 2021 after flash PMI data release.
• U.S. Markit Composite PMI Flash for Jul-21 still recorded an expansion which stood at 59.7 points, lower than previous month at 63.7.
• U.S. Markit Manufacturing PMI Flash for Jul-21 remained strong which stood at 63.1 points beating previous month figure and consensus estimate (62.1 vs 62).
• However U.S. Markit Services PMI Flash for Jul-21 although still in its expansionary zone decelerated to 59.8 points below previous figure and consensus estimate (64.6 vs 64.8).
• U.S. stock markets ended up higher last week with DJI rose 1%; S&P 500 increased 2% and Nasdaq Composite jumped 2.8%.
• Last day trading session those 3 indices closed in a green zone bolstered by strong earnings reporting season.
• Elsewhere yield in DM particularly in U.S & Europe closed higher while in EM Asia closed lower.
Domestic Market Update
• ICBI was slightly corrected to 322.36 last week. 10 year Indo GB yield upped 1 bps from previous day to 6.3%. This was equivalent to 2 bps higher than -1STD our fair yield valuation model.
• Domestic sentiments was mainly driven by BI that kept policy rate unchanged, additional PEN budget in response to PPKM implementation as well as the success of global bond issuance of USD1.65bn and EUR500mn as well as bond auction that reached above its indicative target.
Market Projection
• We see a potential limited move in domestic bond market for today. Global low yield environment remained a positive catalyst for domestic bond price.
• We expect 10 year Indo GB yield to move in a limited range within 6.28- 6.33% for today’s market activity. • Given a potential sideways movement, short term trading strategy may be applied. We see FR0078, FR0087, FR0091, FR0080, FR0075, FR0079 & FR0083 remained attractive.
Disclaimer
