24 September 2024
Fixed Income Report September 24, 2024
Global Market Updates
• Wall Street finished higher on September 23, with the DJIA, S&P 500, and Nasdaq closed up by +0.15%, +0.28%, and +0.14%, respectively.
• The Dow and S&P 500 hit record highs on Monday as stocks edged up, driven by hopes of a soft landing. Fed officials Bostic and Kashkari backed a 50 bps rate cut, citing easing inflation and a cooling job market. Investors await Fed commentary and key inflation data for clues on further cuts.
• The 10-yr UST yield rose by +2.0 bps to 3.75%, and the 2-yr yield also rose by +2.0 bps to 3.57. T-note prices fell as the 10-yr breakeven inflation rate hit a 7-week high of 2.17%. Upcoming Treasury auctions, including USD60 billion in 2-yr notes on Tuesday, added supply pressure, with USD183 billion T-notes scheduled for the week.
• The Chicago Fed National Activity Index increase to +0.12 from July's revised -0.42, beating estimates of -0.20 and reversing two months of declines.
• The US S&P Manufacturing PMI for September 2024 unexpectedly fell by -0.9 to 47.04, from 47.9 in August, missing the forecast of 48.6 and marking the sharpest contraction in 15 months.
• The HCOB Eurozone Manufacturing PMI dropped to 44.8 in September 2024 from 45.8 in August, missing expectations of 45.6. This marks over two years of continuous contractions, with factory activity shrinking at its fastest pace this year.
• Global bond yields were mixed on Monday: the 10-yr German bund yield fell by -5.1 bps to 2.15%, the 10-yr UK gilt yield rose by +2.0 bps to 3.92%, while the 10-yr Japanese JGB stayed flat at 0.85%.
Domestic Market Updates
• Indonesian LCY government bond yields were mixed on Monday, as the 10-year benchmark yield edged up by +1.2 bps to 6.44%, while the 5-year yield fell -2.1 bps to 6.18%.
• The MoF reported a budget deficit of IDR153.7 trillion for August 2024, which is equivalent to 0.68% of GDP. Government revenue reached IDR1,777 trillion, down 2.5% YoY, representing 63.4% of the annual target. Spending totaled IDR1,930 trillion, 58.1% of the cap, up 15.3% YoY (Kontan).
• The IDR weakened against the USD on Monday, with USD/IDR rose by +0.33% to 15,200, while the dollar index climbed +0.30% to 101.02.
• Indonesia's broad money supply (M2) grew by +7.3% YoY in August 2024 to IDR8,973.7 trillion, down from +7.6% YoY in July. This was supported by a +7.0% YoY rise in M1 and a +5.6% YoY increase in quasi-money. Credit disbursement rose +10.9% YoY, while net claims on the central government rose +12.5% YoY, both lower than in July.
• In Monday's Indo-GB series trading, FR0098, FR0103, and FR0081 attracted significant interest in outright transactions, with the highest trade volumes of IDR2.49 trillion, IDR1.95 trillion, and IDR1.43 trillion, respectively. Additionally, PBS032, FR0102, PBS038, FR0091 and FR0081 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 6.45-6.65% for today.
• Attractive Indo GB series to be traded today : FR0081, FR0084, FR0099, FR0083, FR0092.
Disclaimer On
FR81
FR84
FR99
FR83
FR92
