Company Update

24 Agustus 2021

Fixed Income Report - August 24, 2021

Global Market Update

• Recent U.S. economic data release still pictured a decent economic condition which favor the idea of substantial progress of recovery.
• Chicago Fed national activity index came in 0.53 point in July-21, well above previous month of a 0.01 contraction.
• Markit manufacturing PMI (flash) for August-21 remained in an expansionary zone at 61.2, although below previous month (63.4) and market consensus (62,5).
• Flash PMI reading for services sector in August-21 recorded an expansion of 55.2 yet dropping 4.7 points from previous month at 59.9 and below consensus estimate at 59.5.
• Flash Composite PMI readings in August was at 55.4 below previous month at 59.9 and consensus forecast at 58.3.
• U.S. reported a 5.99mn of existing home sales in July-21 or 2% MoM higher than in June-21.
• The 10 year U.S. treasury yield closed flat at 1.26% but the yield move 1-2 bps along the curve, while global yield was slightly up yesterday on the back of possible end year bond tapering by the Fed.
• U.S. equity market continued its appreciation with DJI added 0.61%, S&P 500 appreciated by 0.85% and Nasdaq Composite Index climbed 1.55% higher last night.

Domestic Market Update
• Domestic bond market saw a limited movement with ICBI was closed 0.03% higher yesterday.

• The 10 year Indo GB yield move as we expected and closed at 6.36% or downed 1 bps from previous trading session.
• Rupiah strengthened to IDR 14,413/USD. Risk premium ebbed lower to 73.82 bps.

Market Projection
• In our view, limited move in the U.S. treasury yield would not cause a spike in domestic bond yield.
• Today’s sentiment are coming from loosening social restriction in Greater Jakarta Area, the continuation of government-BI burden sharing scheme in 2022 and sharia debt securities auction by government.
• Government will conduct auction for 6 series of sharia debt securities today with the indicative target of IDR10tn. We expect a lower demand as we already witnessed a strong appetite previously and now investors eye on the Fed.
• Indo GB series such as FR0086, FR0082, FR0087, FR0088, FR0083, FR0062 and FR0092 would be attractive to be traded.



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