23 Juli 2024
Fixed Income Report July 23, 2024
Global Market Updates
• Wall Street staged a recovery on July 22, as the DJIA rose by +0.32%, the S&P 500 surged by +1.08% and the Nasdaq closed up by +1.58%.
• US stocks rallied sharply on Monday, fueled by a rebound in chip stocks after Friday’s major IT outage. However, political uncertainty surrounding President Biden's withdrawal from the race and upcoming tech earnings reports added a layer of volatility to the market.
• The 10-yr UST yields ticked up by +1.0 bps to 4.26%, with the 2-yr yields also rose by +1.0 bps to 4.50%. T-note prices fell due to reduced safe-haven demand following a +1% rally in the S&P 500. Additionally, supply pressure from this week’s USD213bn Treasury auction of T-notes and floating-rate notes contributed to the decline.
• US natural gas futures climbed over 4% to a one-week high above USD2.2/MMBtu, rebounding from an 8.6% drop last week, driven by Freeport LNG resuming shipments post-Hurricane Beryl and expectations of hot weather (Trading Economics).
• The Chicago Fed National Activity Index (CNFAI) fell to +0.05 in June 2024 from a revised +0.23 in May 2024, below the expected -0.09. The CFNAI-MA3, a three-month moving average, improved to -0.01 in June from -0.08 in May.
• In Asia, the PBOC unexpectedly lowered its 7-day reverse repo rate by 10 bps to 1.7% on Monday, following the Third Plenum’s decision against a substantial fiscal stimulus for the faltering economy.
• Global bond yields moved higher on Monday: the 10-yr German bund yield rose by +2.8 bps to 2.46%, the 10-yr UK gilt yield advanced by +3.8 bps to 4.16%, and the Japanese 10-yr JGB yield inched up by +1.1 bps to 1.06%.
Domestic Market Updates
• The Indonesian benchmark series of LCY government bond moved lower on July 22, with the 10-yr benchmark yield surged by +3.5 bps to 6.97%, while the 2-yr yield closed up by +2.4 bps to 6.72%.
• The IDR depreciated against the USD on Monday, with USD/IDR rose by +0.19% to 16,220. Meanwhile, the DXY corrected by -0.12% to 104.28.
• Indonesia's broad money supply (M2) grew by +7.8% YoY in June 2024, reaching IDR9,026.2 trillion. This indicates an expansion of liquidity in the Indonesian economy. The growth was influenced by a +11.5% YoY increase in bank credit and a +3.1% YoY rise in net foreign assets.
• In Monday's Indo-GB series trading, FR0101, FR0100, and PBS032 attracted significant interest in outright transactions, with the highest trade volumes of IDR3.05tn, IDR1.99tn, and IDR1.62tn, respectively. Additionally, PBS032, FR0097, and FR0081 were the most frequently 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 6.85-7.10% for today.
• Attractive Indo GB series to be traded today : FR0081, FR0084, FR0056, FR0087, FR0065, FR0098.
Disclaimer On
FR81
FR84
FR56
FR87
FR65
FR98
