Global Market Updates
• Upon starting the week, Wall Street got back on its tracks and closed in the green; Nasdaq led the gains by +0.93%, S&P 500 followed suit by +0.39% and DJI by+0.22%.
• US stocks were propelled by the tech sector: Tesla (+3.2%) having their new cybertruck product commencing production and Activision Blizzard (+3.5%) having their video game court case went in their favor.
• US Empire manufacturing index reading for July that beat consensus (1.1 vs -3.5) also encouraged the market and lowered the bond yields; the long-term 10-year note yield fell -3.3 bps to 3.8%, while the 2-year note remained flat, keeping the 2-10 year curve spread at -0.94 bps.
• European and Chinese weakened after China’s Q2 GDP release fell short of market’s expectations (+6.3% YoY vs +7.1% YoY) despite a lower base from last year, and only 0.8% QoQ, weighing down on crude oil and coal.
• Next week’s FOMC meeting outcome is practically locked-in; the market is currently looking at a 98% probability for a 25 bps rate hike based on CME FedWatch (vs previous day’s/week’s 96.7%/93%).
Domestic Market Updates
• Indonesia’s benchmark series of LCY government bond unanimously fell yesterday (Jul 17, 2023). The 10-year LCY government bond’s (FR0096) yield went up 3 bps, followed suit by other series.
• The spread between 2-year and 10-year government bond bounced back to 0.24% (vs previous day’s/week’s 0.20%/0.24%).
• IDR weakened against the USD and against other major currencies yesterday as China’s waning economic optimisim weighed on Rupiah’s standing. The USD/IDR rate rose by +0.31% back to IDR15,005.
• The government sukuk auction held today by the Ministry of Finance (MoF) will feature a new short-term treasury sukuk issuance (SPN-S17012024), along with five reopenings of project based sukuk (PBS036, PBS003, PBS037, PBS034 and PBS033), with the indicative target kept at IDR6tn.
Market Forecast
• Given the recent developments that unfolded within the global and domestic markets, we expect the 10 year Indo GB yield to move within the range of 6.15-6.25% for today.
• Attractive Indo GB series to be traded today : FR0070, FR0078, FR0081, FR0082, FR0087, FR0096.
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