Global Market Update
• U.S. treasury yields dropped 1-6 bps along the curve. The 10-year U.S. treasury yield declined by 2 bps to 1.47% in the last day of trading last week.
• The Bureau of Economic Analysis said that personal income rose 0.2% in August on Friday. The actual figure was in line with consensus estimate.
• The core personal consumption expenditures price index rose 3.6% YoY or 10 bps higher than consensus forecast.
• U.S. manufacturing activity in September-21, rose to 61.1 (vs 59.9 in August-21).
• Michigan Consumer Sentiment in September-21 also increased to 72.8 (vs 70.3 in August-21).
• Positive sentiment was also coming from congress that appeared to prevent U.S. government shutdown after passing a short-term appropriations bill that would keep the government running through December 3.
• The positive sentiments also drove U.S. equity market higher. DJI rose by 1.43%. S&P 500 added 1.15% and Nasdaq Composite closed 0.82% higher.
Domestic Market Update
• The 10-year Indo GB yield closed at 6.22% on Friday (10/01/21) after hitting to 6.24%. Yield movement remained in line with our projection at 6.20%- 6.30%.
• As of September 30, foreign investors holdings in tradable Government Securities (GS) has decreased by IDR5.92tn to IDR961.8tn or equivalent to 21.56% of total GS from a week earlier.
• Outflows from government bonds market was accompanied by 13 bps and 3.9 bps higher in 10-year Indo GB yield and 5-year Indo CDS respectively.
• Some influencing factors affecting outflows & rising yields were : 1) rising U.S. treasury yields; 2) U.S. debt ceiling concern; 3) the Fed tapering agenda; 4) rising risk in China's property market. Overall global sentiments were the main driver for rising in Indo government bond yields recently.
• Last week Statistics Indonesia announced that Indonesia CPI experienced a deflation of 0.04% MoM implying a YoY growth of 1.60%. The inflation figure was below our estimate at 1.67% YoY.
Market Projection
• We expect the 10 year Indo GB yield to decline and tend to move within range of 6.15% - 6.25% today.
• Attractive Indo GB series to be traded today : FR0086, FR0090, FR0082, FR0087, FR0091, FR0068, FR0072, FR0062 and FR0092.
Disclaimer
