14 Juni 2024
Fixed Income Report June 14, 2024
Global Market Updates
• Wall Street equities closed mixed on June 13. The DJIA dipped by -0.17%, while the S&P 500 and the Nasdaq closed up by +0.23% and +0.34%, respectively.
• US stocks reached a record close on Thursday, driven by investor sentiment balancing between the impact of cooling inflation and the Fed's pause on interest rate cuts. The S&P 500 and Nasdaq set another new record highs as tech stocks led the broader market rally.
• The 10-yr UST yields fell by -7.0 bps to 4.24%, while the 2-yr yields dropped by -7.0 bps to 4.68%. T-notes extended gains on rising jobless claims and lower-than-expected May producer prices. T-notes soared to their highs Thursday afternoon, due to strong demand in the Treasury’s USD22bn auction of 30-year T-bonds.
• The US initial unemployment claims surged unexpectedly by 13,000, reaching a 10-month peak of 242,000. This development indicates a weaker labor market, as analysts had anticipated a drop to 225,000.
• The US May PPI for final demand came in at +2.2% YoY, down from +2.3% in April and falling short of the anticipated +2.5%. The core PPI, excluding food and energy, also eased to +2.3% YoY from +2.5% in April, underperforming the expected +2.5%.
• Meanwhile, Eurozone industrial output unexpectedly fell 0.1% MoM in April 2024, following a downward revision of March's growth to 0.5%. This decline fell short of analyst expectations for a 0.2% increase.
• Global bond yields declined on Thursday: the German bund yield fell by -6.0 bps to 2.47%, the 10-yr UK gilt yield edged down by -0.5 bps to 4.12%, and the Japanese 10-yr JGB yield dropped by -1.1 bps to 0.98%.
Domestic Market Updates
• The Indonesian benchmark series of LCY government bond move higher on June 13, with the 10-yr benchmark yield fell by -3.70 bps to 6.98%, while the 2-yr yield edged down by -1.06 bps to 6.59%.
• The IDR gained ground against the USD on Thursday (USD/IDR fell by -0.15% to 16,270). The rupiah appreciated after the Fed signaled a single rate cut this year, leading the market to reassess Bank Indonesia’s futures interest rates.
• The rupiah's recent gains are further bolstered by investor confidence returning to the Indonesian government bond market (SBN). This is reflected in declining yields across maturities, signifying a rise in bond prices.
• In Thursday's Indo-GB series trading, FR0100 and FR0101 garnered significant interest in outright transactions, with the highest trade volumes of IDR4.08tn and IDR2.57tn, respectively. Additionally, FR0100, PBS032, and FR0102 showed high trading frequency.
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, FR0101, FR0087, FR0091, FR0100, FR0098.
FR81,
FR101,
FR87,
FR91,
FR100,
FR98
