Global Market Update
• The U.S. treasury yields moved 1-3 bps higher along the curve on Tuesday (08/31/21). The benchmark 10 year U.S. treasury yield rose 3 bps to 1.31% • The market reacted on Euro Zone inflation data release. The CPI in August21 increased by 3% YoY, reaching a decade high.
• Germany reported its highest consumer prices since 2008 on Monday which came to 3.4% YoY in August-21. France also reported its highest inflation in nearly 3 years on Tuesday.
• The ECB is set to meet Sept 9 and is expected to discuss the fate of its asset purchase program following the Fed’s plan.
• After reaching an all time high level, Wall Street closed lower. DJI dropped 0.11%; S&P 500 declined by 0,14% while Nasdaq Composite downed 0.04%.
• China service sector experienced the first contraction since Covid-19 pandemic strike as Service PMI readings dropped to 47.5 in August-21.
Domestic Market Update
• The domestic financial market closed higher yesterday. JCI, ICBI and IDR edged up. Both government and corporate bond prices finished higher yesterday.
• The 10 year Indo GB yield dropped 5.4 by bps to 6.06. JCI was appreciated by 0.09% while IDR traded up by 0.71%.
• The low external pressure has supported the financial assets to rally. This is in line with the decline in 5 year CDS which now stood below 70 bps.
• Government successfully raised IDR21tn from yesterday auction. The total incoming bids reached >IDR100tn r IDR116tn to be precise.
• The amount of incoming bids were recorded at its highest level since the first auction was conducted in 2021 indicating high investors interest.
Market Projection
• Today’s market sentiment is coming from the global manufacturing data to be released.
• BPS will also announce August-21 inflation figure today. We expect Indonesia CPI to rise 1.59% YoY in the last month.
• 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 : FR0084, FR0071, FR0078, FR0082, FR0087, FR0068, FR0080, and FR0083
Disclaimer
