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Company Update

20 Agustus 2021

Fixed Income Report - August 20, 2021

Global Market Update

• The Fed recent plan to curb bond purchase by the end of this year as stated in the minutes of meeting has not triggered the treasury yield to spike.
• The 10 year benchmark yield declined by 3 bps to 1.24% last night (08/19/21).
• U.S. job market continued to gain its strength. The latest initial jobless claims figure was at 348,000 as of August 14, 2021 below consensus estimate at 365,000 and previous week of 377,000.
• However mixed economic data including the drop in consumer sentiment and missed retail sales have weighed on bond yield.
• After dipping into a correction, U.S. equity market ended mixed last night. Only DJI which turned into red after a drop by 0.19%. Meanwhile S&P 500 and Nasdaq Composite closed more than 0.1% higher than previous trading session.

Domestic Market Update
• As we have expected, BI hold its key interest rates with 7-day Reverse Repo at 3.5%; Lending Facility at 4.25% and Deposit Facility at 2.75%.
• Domestic bond market showed a limited movement despite a significant fall of domestic stock market following a fall in global equities yesterday.
• The 10 year Indo GB yield closed slightly flat at 6.33% and remained in line with our expectation.
• Rupiah depreciated and reached above 14,400/USD at the same time. Despite potential concern of earlier tapering off by the Fed, Indonesia risk premium remains stable below 75 bps.

Market Projection
• Given the limited reaction of U.S treasury yield to the Fed response on tapering off agenda, the external pressure is limited, therefore Indo bond market will likely to follow the trend.
• We expect the 10 year Indo GB yield to move within 6.30%-6.35% on Friday (08/20/21).
• FR0086, FR0064, FR0071, FR0078, FR0087, FR0068, FR0083, FR0092 and FR0089 are attractive for trading purpose.

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