The majority of government bonds (SUN) prices closed higher yesterday, as investors responded positively to the minutes of the Fed meeting which maintained its bond buying policy. This policy is to sustain price stability and full absorption of US labor. Yield on the benchmark 10-year SUN FR0087 closed at 6.46%, with the UST yield falling back down to 1.65%. This proves that the monetary policy is tight and tapering, as something too early to do at this time. On the other hand, Joe Biden stated that he is ready to negotiate the plan to increase the corporate income tax (Pph) to 28%, in order to fund his infrastructure program worth USD 2 trillion.
The Performance of Corporate Bonds Is Better Than Government Bonds. The volatility of corporate bonds is lower than government bonds. Amid the pressure on the bond market, corporate bonds managed to outperform government bonds. The INDOBeX Government Total Return, which describes the performance of government bonds, declined 1.07% year to date (ytd) until Wednesday (7/4). Meanwhile, INDOBeX Corporate Total Return, which describes the performance of corporate bonds, grew 2.28% in the same period. (Kontan)
Consumer Confidence in March 2021 Increases. Danareksa Research Institute (DRI) sees an increase in consumer confidence in March 2021. This is reflected in the Consumer Confidence Index (IKK) for March 2021 which rose 0.1% MoM to 74.9. This increase in consumer confidence was driven by an increase in one of the supporting components of the IKK, namely the Consumer Expectation Index (IEK). IEK increased 0.8% MoM to 100.7. Consumers appear positive about expectations of job availability. (Kontan)
Yield Chances To Drop Back. Market participants have the opportunity to respond positively to the minutes of the Fed meeting which maintains its bond buying policy. Yield movement this weekend has the opportunity to fall back. The Fed projects that the US economy will recover substantially in 2021, amidst an economic re-opening which will then continue to facilitate the labor market recovery. Investors are keeping a close watch on profit taking for the benchmark series SUN, ahead of the SUN auction next Tuesday. The government is again offering FR0086, FR0087, FR0088, FR0083, and FR0089 at the upcoming auction.