14 Agustus 2024
Fixed Income Report August 14, 2024
Global Market Updates
• Wall Street closed higher on August13, with the DJIA, S&P 500, and Nasdaq surged by +1.04%, +1.68%, and +2.43% respectively.
• US stocks jumped on Tuesday as Wall Street absorbed cooler inflation data ahead of the July CPI release. The market's gains were supported by lower bond yields, with July producer prices increasing less than expected, reinforcing the likelihood of a Fed rate cut next month.
• The 10-yr UST yield fell by -5.0 bps to 3.85%, while the 2-yr yield plunged by -8.0 bps to 3.93T-note prices climbed on Tuesday following the Fed-friendly US July PPI report and a drop in the 10-year breakeven inflation rate to 2.095%.
• The US producer prices eased in July, with the overall index declining to +2.2% YoY from +2.7% YoY in June, below expectations of +2.3% YoY. Prices excluding food and energy also softened, falling to +2.4% YoY from +3.0% YoY in the previous month.
• In Europe, the UK's unemployment rate declined to 4.2% in the second quarter, marking a decrease from the previous period’s two-and-a-half-year high of 4.4%. This unexpected drop also undershot market expectations of a 4.5% rate.
• In Asia, Japan's producer price inflation met market forecasts in July, with prices increasing +0.3% MoM and +3.0% YoY, indicating continued inflationary pressures.
• Global bond yields moved lower on Tuesday: the 10-yr German bund yield declined by -4.0 bps to 2.18%, the 10-yr UK gilt yield fell by -2.8 bps to 3.88%, and the 10-yr Japanese JGB yield edged down by -0.60 bps to 0.85%.
Domestic Market Updates
• The Indonesian benchmark series of LCY government bonds moved higher on August 13, with the 10-yr benchmark yield declined by -1.1 bps to 6.77%, while the 2-yr yield slid by -3.5 bps to 6.47%.
• The IDR strengthened against the USD on Tuesday, with USD/IDR fell by -0.77% to 15,833. The rupiah gained traction on the back of dovish US PPI data, with further support from the positive sentiment surrounding yesterday's successful SBSN auction.
• The SBSN auction on Tuesday saw reduced demand, with total bids dropping to IDR17.96 trillion from IDR24.68 trillion in the previous auction. PBS030 received the highest awarded amount of IDR1.93 trillion, with a weighted average yield of 6.66% and a bid-to-cover ratio of 1.08, out of a total awarded amount of IDR8.00 trillion.
• In Tuesday's Indo-GB series trading, FR0100, FR0098, and PBS038 attracted notable interest in outright transactions, with the highest trade volumes of IDR2.70 trillion, IDR2.19 trillion, and IDR2.11 trillion, respectively. Additionally, PBS0032, FR0102, and PBS038 were the most frequently traded series.
Market Forecast
• Given the recent developments that unfolded within the global and domestic markets, we expect the 10-yr Indo GB yield to move within the range of 6.75-7.00% for today.
• Attractive Indo GB series to be traded today : FR0081, FR0084, FR0056, FR0059, FR0085.
Disclaimer On
FR81
FR84
FR56
FR59
FR85
