Global Market Updates
• Upon last week’s closing, Wall Street extended its loss with the DJI having edged down by -0.55%, S&P slid-0.29% and the NDX ticked down -0.13%, as the market weighed on weaker-than-expected increase in June’s nonfarm payrolls of +209k (vs forecast of +230k).
• While the hiring slowed down from May’s 306k, the 4.4% YoY wage growth (vs consensus forecast of 4.2% YoY) might still uphold inflation and put the Fed to remain on its hawkish track.
• Therefore we saw that market participants have locked in to July’s rate hike likelihood: probabilities are now discounted at 92.4% (vs 91.8% on the previous day), with an expected peak rate of 5.42% by Nov-2023.
• We also saw a further increase in US long-term 10-year treasury yield by +3.3 bps, finishing at 4.06% last week, while the shorter-termed 2-year yield shrunk back to 4.94%, leaving the yield curve inversion at -0.88 bps.
• Global bonds was closed mixed; the 10-year UK Gilt retreated from its 14-year high by -1.1 bps to 4.65%, while the 10-year German bund yield climbed +1 bps along with the Japanese govt’s 10-year bond that ended 1.4 bps higher to 0.43%.
Domestic Market Updates
• Indonesia’s benchmark series of LCY government bond continued its depreciation upon closing last week (Jul 7, 2023). Indonesia’s benchmark 10-year LCY government bond’s (FR0096) yield rose by 5 bps, followed suit by all benchmark series.
• We observe foreign outflow to have taken place so far in July (-0.42% MTD of government bond ownership by foreign), while banks and mutual, insurance and pension funds have steadily increased their positions (+1.59 MTD and +0.99% MTD, respectively).
• IDR weakened against most major currencies yesterday. It depreciated against the USD as the USD/IDR rate rose by +0.60% and was closed at IDR15,135.
Market Forecast
• Given the recent developments that unfolded within the global and domestic markets, we expect the 10 year Indo GB yield to move within the range of 6.10-6.30% for today.
• Attractive Indo GB series to be traded today : FR0070, FR0081, FR0082, FR0087, FR0096.
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