Global Market Update
• The U.S. FDA approval on Pfizer-BioNTech Covid-19 vaccines causing the 10 year U.S. treasury yield to move higher on Tuesday (08/23/2021).
• The government benchmark yield was up nearly 4 bps from previous trading session to 1.295% yesterday. The U.S. treasury yield moved 1-4 bps higher along the curve.
• The U.S. new home sales in July-21 recorded at 0.71 mn units or 1% higher than previous month.
• Market participants keep an eye on the Fed guidance on asset purchases tapering in the Jackson Hole Symposium that due on Thursday this week.
• On the other hand, U.S. equity market indices were up last night with DJI added 0.09% meanwhile for S&P 500 and Nasdaq Composite Index closed at 0.15% and 0.52% higher.
Domestic Market Update
• Government has decided to loosen the social restriction measures in some regions in Indonesia, particularly in Greater Jakarta Area. • The 10 year Indo GB yield closed at 6.27% or 9 bps higher than the previous day and below our expectation.
• Government has conducted auction for Sovereign Sharia Securities on Tuesday August 24, 2021 with the total awarded amount of IDR9tn.
• The awarded value was IDR1tn lower than indicative targets. However we see that the appetite remained high despite there is a signal from the Fed to taper asset purchases by the end of 2021 or early 2022. This can be seen from the incoming bids of IDR52.5tn or IDR0.81tn higher than the previous auction.
Market Projection
• The spike in the U.S. treasury would be a negative catalyst for domestic Indo GB yield.
• However we see this only occurred temporary and we expect the 10 year Indo GB would likely to move within range of 6.30%-6.35%.
• Some of government securities such as FR0082, FR0071, FR0078, FR0082, FR0087, FR0068, FR0083 and FR0092 still attractive to be traded.
Disclaimer
