Global Market Updates
• Wall Street managed to strengthen Monday (Jul 24, 2023) propped up by crude oil’s rally that bolstered energy stocks, as well as gains in regional bank stocks.
• Yesterday’s economic data readings came in mixed: the Jun Chicago Fed activity index came in at -0.32, weaker than expectations of -0.13, while the Jul S&P manufacturing PMI overperformed by rising to 49.0, beating expectations of a fall to 46.2.
• US long-term 10-year Treasury notes yields rose by +3.8 bps to 3.87%, while the short-termed 2-year notes remained flat at 4.81%. Elsewhere, the 10-year German bund fell -4.4 bps to 2.43% followed by the 10-year UK Gilt that fell -2.4 bps to 4.26%.
• US-listed Chinese stocks recorded their most expansive gain Monday since Feb-23, backed up by commitments from Beijing of further support to the faltering economy, including pledges of dovish policies, housing easings, local debt resolutions and a stimulus to capital markets.
Domestic Market Updates
• Indonesia’s benchmark series of LCY government bonds closed slightly mixed Monday (Jul 24, 2023). The 10-year LCY government bond’s (FR0096) yield along with other long-termed benchmark series appreciated, whilst the shorter-termed bonds weakened.
• We see rising demand for gov’t bonds based on Jul 21 inflow data that showed IDR4.8tn foreign inflow over the week, along with net purchases from banks and mutual & insurance funds.
• The IDR gained a slight edge against the USD and against other major currencies. The USD/IDR ticked by -0.01% to IDR15,023.
• Today’s government securities auction will feature two new issuances (SPN03231025 and SPN12240725) with the same reopenings and same indicative target of IDR14tn. We view that incoming bids will match last auction’s volume of c. IDR47tn given the recent strong demand trend.
• For today’s BI RDG meeting, we are of the view that the BI7DRR will be held at current level for now given the adequate disinflationary response, while future policy rate decisions remain indefinite.
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 6.20%-6.25% for today.
• Attractive Indo GB series to be traded today : FR0070, FR0077, FR0081, FR0082, FR0087, FR0096.
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