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10 Juli 2024

Fixed Income Report July 10, 2024

Global Market Updates     
• Wall Street equities saw mixed results on July 9, with the DJIA slid by -0.13%, the S&P 500 edged up by +0.07% and the Nasdaq close up by +0.14%.
• Stocks indexes closed mixed on Tuesday, with the S&P 500 and Nasdaq reaching new all-time highs. Gains in bank and chip stocks lifted the overall market. The broader market held up after Fed Chair Powell's balanced comments, as hopes for rate cuts remained following his semiannual update to Congress.
• The 10-yr UST yields rose by +2.0 bps to 4.30%, while the 2-yr yields remained unchanged at 4.62%. T-note prices dipped on Powell's inflation comments but recovered after the USD58 billion 3-yr auction saw robust demand, exceeding the 10-auction average bid-to-cover ratio.
• The markets are focused on Thursday’s June US CPI report to see if inflation is continuing to ease. The consensus forecast is for June CPI to have declined to +3.1% YoY from +3.3%YoY in May, with the June core CPI staying unchanged from May at +3.4% YoY.
• In Asia, Taiwan reported a +23.5% YoY surge in exports to USD39.90 billion in June 2024, exceeding the forecasted +11.45% growth and marking the strongest expansion since February 2022.
• Global bond yields were mixed on Tuesday: the 10-yr German bund yield rose by +4.0 bps to 2.58%, the 10-yr UK gilt yield grew by +4.6 bps to 4.16%, and the Japanese 10-yr JGB yield slid by -0.3 bps to 1.09%.
 
Domestic Market Updates 
• The Indonesian benchmark series of LCY government bond moved lower on July 9, with the 10-yr benchmark yield surged by +2.02 bps to 7.03%, while the 2-yr yield rose by +1.39 bps to 6.68%.
• The IDR appreciated against the USD on Tuesday, reversing an earlier decline. The USD/IDR exchange rate fell by -0.03%, reaching 16,250.
• In Tuesday’s SUN auction, investors secured IDR24.0tn in winning bids from a total of IDR48.3tn. The series auctioned included new issuances of SPN03241009 and SPN12250710 along with the reopening of FR0101, FR0100, FR0098, FR0097, and FR0102. Notably, FR0100 achieved the highest awarded bid, with a bid-to-cover ratio of 1.94, securing IDR8.65tn from a total bid of IDR16.74tn.
• Bank Indonesia expects retail sales in June 2024 to rise, with the Real Sales Index (IPR) hitting 232.8, a +4.4% YoY increase. Growth is fueled by household equipment, clothing, food, beverages, and tobacco. Additionally, sales are projected to rise +2.1% MoM during Iduladha and the school holiday.
• In Tuesday's Indo-GB series trading, FR0100 and FR0098 garnered notable interest in outright transactions, with the highest trade volumes of IDR12.11tn and IDR11.30tn, respectively. Additionally, FR0100, PBS032, and FR0097 were the most actively traded series.



Market Forecast 
• Given the recent developments that unfolded within the global and domestic markets, we expect the 10-yr Indo GB yield to move within the range of 6.85-7.15% for today.
• Attractive Indo GB series to be traded today : FR0081, FR0084, FR0101, FR0087, FR0074, FR0080. 
 
 
Disclaimer On

FR81 FR84 FR101 FR87 FR74 FR80

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