Awaiting Indonesian GDP data, benchmark SUN series closed flat in yesterday’s trade. Based on a Bloomberg survey, Indonesia’s Gross Domestic Product (GDP) for the 2Q20 period is projected to contract -3.35% QoQ and -4.49% YoY respectively. This survey is holding back the pace of movement in Government Securities (SUN) which moved to strengthen this week. Previously, investors responded positively to the decline in both the Credit Default Swap (CDS) and the US dollar index, as well as the appreciation of the rupiah exchange rate. Investors also project the Fed to keep its benchmark interest rate back at the Federal Open Market Committee (FOMC) meeting Wednesday (29/07) which keeps interest rates at around 0% -0.25%. Yesterday, the rupiah exchange rate on the spot market closed slightly down 0.05% to the level of IDR 14,542 / USD, with the BI middle rate depreciating 0.18% to IDR 14,570 / USD.
SMF Encourages the Improvement of the Housing Sector. The government asks finance companies Sarana Multigriya Financial (SMF) to implement strategies to encourage the housing sector. For the record, before the pandemic the home ownership backlog reached more than 11 million, and currently the impact of Covid-19 resulted in a slowdown in housing demand. The housing sector is an important sector, has a multiplier figure or can attract other sectors, such as the construction sector, labor, cement sector, and mining. As for the KL / LG sectoral National Economic Recovery (PEN) program valued at IDR 106.1 trillion, the government also included housing incentives in the form of interest subsidies and advance payments for MBR worth IDR 1.3 trillion.
Realization of the New PEN Reaches 19.9%. Realization of the new PEN budget is channeled IDR 138.3 trillion as of July 22, 2020. This figure is equivalent to 19.9% of the total program budget of IDR 695.2 trillion. Meanwhile, the realization of the budget for the health sector has only been realized IDR 6.8 trillion or 7.7% of the indicative ceiling of IDR 87.6 trillion. Meanwhile, the social protection sector and Micro, Small and Medium Enterprises (MSMEs) were realized quite well, respectively at 38.3% and 25.3%. However, only 6.6% of sectoral and regional governments were realized. Meanwhile, corporate financing is 0% because the preparation of the Budget Implementation List (DIPA) has just been prepared, then business incentives are 13.2%.
The Fed Keeps Interest Rates, is becoming a positive market sentiment today. The Fed will maintain interest rates, revealed in the FOMC meeting results released Wednesday (29/07) to determine US monetary policy going forward. The US Central Bank also maintains a number of stimuli, such as bond purchases and a series of loan programs and liquidity related to the pandemic response. In addition to interest rates, the Fed also extended dollar liquidity swabs and temporary repo operations until March 31, 2021. At present, the Fed’s interest rates are in the range of 0% -0.25%. At the meeting last June, the Fed projected an economic decline of 6.5% (median). But the economy will increase 5% in 2021, and 3.5% in 2022. Investors can go back to look at FR0082, FR0080 and FR0083 in today’s trading.
-REVIEW (July 29, 2020)-
-PRICE OF BENCHMARK SERIES-
FR0081 (5yr): -0.6 Bps to 102.33 (5.93%)
FR0082 (10yr): -0.2 Bps to 101.38 (6.80%)
FR0080 (15yr): -1.8 Bps to 102.29 (7.24%)
FR0083 (20yr): -0.8 Bps to 101.32 (7.37%)
-YIELD OF GLOBAL BONDS-
UST 2yr: -0.008 point to 0.13%
UST 5yr: -0.013 point to 0.25%
UST 10yr: -0.004 point to 0.57%
UST 30yr: +0.020 point to 1.23%
German Bund 10yr: +0.008 point to -0.50%
UK Gilt 10yr: +0.010 point to 0.11%
-CDS OF INDONESIA BONDS-
CDS 2yr: -1.01% to 48.25
CDS 5yr: +0.57% to 117.71
CDS 10yr: -0.77% to 184.15
-CRUDE OIL PRICES-
WTI: +0.56% to USD41.27/Barrel
BRENT: +1.22% to USD43.75/Barrel