Global Market Update
• U.S. job market continued to gain its strength. As of September 9, the initial jobless claims dropped to 310,000 below previous week figure of 345,000 and consensus estimate 335,000.
• The Fed governor Michelle Bowman urged the central bank to trim the asset purchase worth of USD120bn/month later this year.
• Despite the recent pressure to taper earlier this year, the government bond yield ebbed lower yesterday (09/09/21).
• The 10 year U.S. treasury yield declined by 4 bps to 1.30%. Overall the U.S. treasury yields dropped 1-5 bps along the curve.
• U.S. stock market tumbled at the same time. DJI & S&P 500 dropped more than 0.4% while Nasdaq Composite lost 0.25%.
• Elsewhere ECB kept the interest rates unchanged at its historical low. However the ECB President Christina Lagarde said that the pace of asset purchases under PEPP needs to be reduced in the coming quarter.
• The pace of asset purchase will be slowed down to around EUR60-70bn from previously USD80bn.
Domestic Market Update
• ICBI closed at 327.73 yesterday nearly flat from the previous trading session.
• The 10 year Indo GB yield stayed flat at 6.17%. The prices of Indo GB benchmark series (FR0086, FR0087, FR0088 & FR0083) were little changed.
• The value of Indonesian rupiah remained at IDR14,253/USD yesterday. Meanwhile 5 year Indo CDS was stable below 70 bps.
• The spread between 10 year U.S. treasury & Indo GB yield was at 483 bps.
• Bank Indonesia (BI) reported the domestic retail sales contracted -5.0% MoM/- 2.9% YoY in July-21.
• The retail sales was deteriorated during the implementation of social restriction (PPKM leveling) in Java & Bali.
Market Projection
• With the decline of U.S. treasury yield there is a potential upside for domestic bond market on Friday (09/10/21).
• However we expect the 10 year Indo GB yield to move within range of 6.10%- 6.20%.
• Attractive Indo GB series to be traded today : FR0086, FR0064, FR0071, FR0078, FR0082, FR0087, FR0068, FR0088 & FR0083.
Disclaimer
