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26 Agustus 2021

Fixed Income Report - August 26, 2021

Global Market Update
• After FDA approval on Pfizer-BioNTech vaccine triggering U.S treasury yield to hike, now markets geared up on the Fed’s annual Jackson Hole symposium that will kick off today.
• The 10 year U.S. treasury yield hiked 5 bps to 1.35% on Wednesday (08/25/21).
• Markets are waiting on Fed’s chair Powell to give a speech and give a further signal on the fate of USD120bn bond buying program.
• The U.S. new order of manufactured durable goods fell 0.1% MoM in July-21 after rising 0.8% in the previous month. This is the first contraction in the last 3 months.
• The U.S. equities extended their gains with S&P 500 and Nasdaq Composite hitting five days straight of rally.
• DJI rose 0.11%; S&P 500 edged up higher with 0.22% gain and Nasdaq Composite closed 0.15% higher last night.

Domestic Market Update
• Surprisingly, unlike what we have expected the 10 year Indo GB yield continued to decline yesterday.
• The government bond benchmark yield declined 5 bps to 6.22%, while at the same time rupiah recorded a slightly depreciation against USD to IDR 14,398/USD. • Bank Indonesia (BI) recorded Indonesia M2 grew 8.9% YoY in July-21. The growth decelerated from 11.4% YoY in June-21.
• Factors affecting M2 growth were rising net foreign assets (+4.3% YoY) and limited loan disbursement (+0.3% YoY).
• Although liquidity in economy remained ample, we expect the inflationary impact would still minimum as money velocity dropped during the period of social restriction.

Market Projection
• We expect the 10 year Indo GB yield to rise on Thursday (08/26/21) trading activity after declining for two days and on the back of rising U.S. treasury yield.
• We foresee the 10 year benchmark yield to move within range of 6.25%- 6.30%.
• Some of government securities such as FR0071, FR0078, FR0082, FR0082, FR0068, FR0072, and FR0083 still attractive to be traded.

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