Global Market Update
• 10 year U.S. treasury yield closed lower to 1.24% in July 27, 2021 ahead of the Fed FOMC policy meeting announcement that is due to begin on Wednesday (07/28/21).
• The widespread of Delta variant is expected to make central bank sound more cautious on outlook rather than inflationary pressure that is believed to be temporary.
• Market expects the Fed to trim its asset purchase late this year or early next year, but if the virus infection continues to impact the economy, that could change.
• U.S. stock market fell for the first time in six days. DJI dropped 0.24%, meanwhile S&P 500 and Nasdaq Composite declined by 0.47% and 1.21% respectively.
Domestic Market Update
• ICBI settled at 322.6 or added 0.04% yesterday. INDOBeX Composite Clean Price also increased by 0.02% at the same time. • 10 Year Indo GB yield stayed at 6.31% or equivalent to -1STD of our fair yield model.
• Rupiah depreciated against USD to 14,493/USD yesterday, while Indonesia risk premium increased to 82.8 bps at the same period. U.S.- Indo spread increased to 507 bps.
• Government successfully raised IDR13.15tn from yesterday’s Islamic Debt Securities Auction. The total awarded was higher than indicative target of IDR13tn. Total incoming bids remained high at IDR56.7tn indicating high investors appetite. Market Projection
• 10 year U.S. treasury yield drop would be a positive catalyst for today’s market activity. However we still expect to consolidate with 10 year Indo GB to likely move within range of 6.28-6.32% today.
• Given the potential sideways movement, short term trading strategy might be applicable. We see FR0086, FR0087, FR0083 and FR0092 remained attractive.
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