Company Update

16 Juli 2024

Fixed Income Report July 16, 2024

Global Market Updates

• Wall Street equities ended higher on July 15, as the DJIA gained by +0.53%, the S&P 500 edged up by +0.28% and the Nasdaq increased by +0.40%.

• Stock indexes soared to new record highs on Monday, fueled by speculation of improved electoral prospects for Donald Trump after an unsuccessful assassination attempt on Saturday. Furthermore, stocks maintained their gains Monday after dovish comments from Fed Chair Powell.

• The 10-yr UST yields surged by +5.0 bps to 4.23%, while the 2-yr yields slid by -1.0 bps to 4.44%. Monday saw T-notes decline due to a stronger-than-expected July Empire manufacturing survey report, while the S&P 500's new record high curbed safe-haven interest in T-notes.

• The Empire Manufacturing Survey for July indicated a continued decline in general business conditions. The index fell to -6.6, which was better than the anticipated -7.6.

• The Eurozone industrial production experienced a -0.6% MoM decline in May over the previous month. This marks the steepest decline in four months but came in slightly better than expectations of a -0.7% fall.

• In Asia, China's economic growth in Q2 of 2024 fell short of expectations, expanding by +4.7% YoY. This marks a slowdown from the +5.3% growth recorded in Q1 and disappoints market forecasts of +5.1%.

• Global bond yields were mixed on Monday: the 10-yr German bund yield fell by -2.3 bps to 2.47%, the 10-yr UK gilt yield edged down by -0.8 bps to 4.10%, and the Japanese 10-yr JGB yield remained steady at 1.07%.

Domestic Market Updates

• The Indonesian benchmark series of LCY government bond moved lower on July 15, with the 10-yr benchmark yield rose by +1.99 bps to 6.95%, while the 2-yr yield rose by +2.40 bps to 6.69%.

• The IDR depreciated against the USD on Monday (USD/IDR +0.20% to 16,170). The IDR weakened along with major Asian currencies as USD demand surged after Donald Trump was shot while campaigning in Pennsylvania, with market sentiment remained centered on Fed rate cut prospects.

• BPS recorded a trade balance surplus of USD2.39 billion in June 2024, down USD0.54 billion from the previous month’s USD2.92 billion. This surplus was supported by the non-oil and gas sector at USD4.43 billion, offset by a deficit in the oil and gas sector of USD2.04 billion.

• As of May 2024, BI reported a +1.8% YoY increase in Indonesia's external debt to USD 407.3 billion (or equivalent IDR 6,586.04 trillion). This includes USD 18.78 billion from BI, USD 191.0 billion in government debt, and USD 197.6 billion in private debt. The debt-to-GDP ratio is 29.8%, with long-term debt comprising 85.9% of the total.

• In Monday's Indo-GB series trading, FR0100 and FR0081 attracted significant interest in outright transactions, with the highest trade volumes of IDR2.86tn and IDR1.78tn, respectively. Additionally, PBS032, PBS038, and FR0100 were the most actively 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 6.85-7.10% for today.
• Attractive Indo GB series to be traded today : FR0081, FR0084, FR0075 , FR0098, FR0092.

Disclaimer On

FR81 FR84 FR75 FR98 FR92

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Fixed Income Report July 16, 2024