Global Market Update
• After experiencing a choppy trading yesterday, 10 year U.S. treasury yield stayed flat at 1.24%. The Fed kept interest rate unchanged and bond buying steady at USD120bn per month.
• The Fed chair has stated that U.S. economy has made progress towards central bank’s goal. However the Fed sees inflation to stay above 2% in the months ahead.
• Markets try to find some signal of the Fed potential policy normalization. With the latest statement of Chair Powell, market shows investors increasingly see interest rate hike by the end of 2022.
• U.S. stock market has muted reaction on latest the Fed policy meeting announcement. DJI and S&P 500 closed 0.36% dan 0.02% lower than the previous day, meanwhile Nasdaq Composite climbed 0.7%.
Domestic Market Update
• ICBI settled at 322.8 or added 0.05% yesterday. INDOBeX Composite Clean Price also increased by 0.03% at the same time.
• 10 Year Indo GB yield stayed flat at 6.31% or equivalent to 1bps higher than -1STD of our fair yield model. • Rupiah climbed up against USD to 14,488/USD yesterday, while Indonesia risk premium remained at 82.8 bps at the same period. U.S.-Indo spread was 507 bps.
• IMF revised down its FY21 GDP growth projection for Indonesia to 3.9% in July-21 from previously 4.3% in April-21
Market Projection
• We expect market to continue its consolidation pattern for today as 10 year U.S treasury yield remained at its lowest range since Feb-21.
• In our view, 10 year Indo GB yield will likely to move within range of 6.29-6.32% in July 29, 2021.
• Given the further potential of consolidation, short term trading strategy may remain applicable. We see FR0071, FR0068, FR0083 and FR0092 remained attractive
