Global Market Update
• U.S. job market report come with a solid number again. The initial jobless claims as of Aug 28, 2021 were at 340,000.
• The number of jobless claims were lower than previous figure at 354,000 and consensus estimate at 345,000.
• U.S. also reported a lower trade deficit in July-21 with a negative USD70bn compared to previous month of negative USD73.2bn, in line with consensus forecast. • The movement of U.S. treasury yield remained flattish last night despite the solid job report released.
• Last night, the 10 year U.S. treasury yield closed at 1.29%. On a weekly basis the benchmark yield has fallen by 6 bps.
• Non-Farm Payroll data will be released today. Consensus estimated the NFP would add 743,000 additional jobs in Aug-21 making the unemployment rate to fall by 20 bps to 5.2% from previously 5.4%.
• Markets also anticipate the Fed taper announcement in September meeting. We believe that bond taper would come as early as November21 with the pace of asset purchase reduction by USD15bn.
Domestic Market Update
• There was a correction of 0.06% in ICBI yesterday. The 10 year Indo GB yield rose 1 bps to 6.10% on Thursday (09/02/21), in line with our expectation.
• The benchmark government bond yield now traded near its -1STD fair yield valuation. This was attributable to limited movement in U.S. treasury yield and low external pressure.
• Indonesia 5 year CDS was stable and consistently below 70 bps this week. Rupiah also strengthened 1.02% against USD on a weekly basis.
• In August-21, foreign ownership in domestic tradable government debt securities increased to IDR980tn implying a nearly IDR14tn inflow.
Market Projection
• Given the U.S. treasury yield limited movement, the 10 year Indo GB yield will likely to move within range of 6.05%-6.15% on Friday (09/03/21).
• The attractive government bond series to be traded are : FR0086, FR0064, FR0082, FR0087, FR0068, FR0072, FR0083, FR0076
Disclaimer
