Global Market Update
• The U.S. treasury yields slightly rose 1-2 bps along the curve ahead of the Fed’s September policy meeting.
• The Fed is expected to give a further detail on its plan to slowdown the pace of asset purchase or QE on Thursday (09/23/21) announcement.
• Last night the 10 year U.S. treasury yield stayed at 1.32% while the U.S. equity market closed varied.
• DJI and S&P 500 slightly fell 0.15% and 0.08% respectively. Meanwhile Nasdaq Composite rose 0.22% after previous sell of with more than 1.5% correction.
• The Reserve Bank of Australia (RBA) kept the cash rate unchanged at a record low of 0.1% during its September meeting, as widely expected.
• RBA also confirmed plans to trim the purchase of government bonds to AUD4bn a week and determining to do it until at least mid-February 2022.
• Now it’s time to normalize the monetary policy by trimming the pace of central bank asset purchase.
• The potential default on Chinese second largest property developer Evergrande & U.S. government shut down due to failure to increase debt ceiling that might trigger default are risks stemming the market.
Domestic Market Update
• The 10 year Indo GB yield stayed at 6.16% on Tuesday (09/21/21) and remained within our forecast range of 6.10%-6.20% so far.
• 5 year Indo CDS was still above 80 bps while rupiah slightly appreciated against USD to IDR 14,238/USD from previously at IDR 14,243/USD.
• Government successfully raised IDR6.1tn from sovereign sharia securities auction yesterday. The total incoming bids were at IDR45.4tn or below the last 4 auctions which were consistently above IDR50tn ahead of the Fed’s policy meeting announcement that due on Thursday (09/23/21).
• As we already expected, Bank Indonesia (BI) kept its 7-day reverse repo rate unchanged at 3.5% to maintain rupiah stability and supporting economic recovery momentum.
Market Projection
• We expect the 10 year Indo GB yield to move within range of 6.10% - 6.20% today.
• Attractive Indo GB series to be traded today : FR0086, FR0064, FR0071, FR0078 FR0082, FR0087, FR0068, FR0080, FR0072, FR0057 & FR0062.
Disclaimer
