Trump Policy Can Benefit Domestic Bonds

By : Wiyanto Dan Aldo Bella Putra | Friday, July 20 2018 - 15:30 IWST

Reza Priyambada, analis PT Binaartha Parama Sekuritas (Foto Abe)

INDUSTRY.co.id - Jakarta - The return of negative sentiment can give negative impact also on the movement of the domestic bond market where market players are expected to return to selling action.

Capital Market Analyst Reza Priyambada said on the other hand, the attitude of President Trump who objected to the policy of rate hikes from the Fed makes the movement of US bond yields tend to move down.

"It is expected that this sentiment can withstand the weakening that occurs in the domestic bond market, otherwise, be alert to the potential weakening again," he said in Jakarta on Friday (20/07/2018).

Rupiah movements are back weakened and yields on US bonds back up the impact on the movement of the domestic bond market back weakened. As for the movement of each tenor is for short tenor (1-4 years) the yield is an average increase of 7.74 bps; medium tenor (5-7 years) up 9.83 bps; and length (8-30 years) rose 5.55 bps.

The rate of the bond market tends to move down as the variations of sentiment remain. In FR0063 which has a maturity period of ± 5 years with a price of 91.75% has a yield of 7.70% or up 0.14 bps from the previous at 92.29% price has a yield of 7.56%. For FR0075, which has a maturity of ± 20 years with a price of 94.02% has a yield of 8.11% or up 0.06 bps from the previous day at a price of 94.55% having a yield of 8.05%.

On Thursday (19/7), the average government bond price reflected in the INDOBeX Government Clean Price was down 0.56 bps at 110.09 from the previous level of 110.70. Meanwhile, the average price of corporate bonds reflected in INDOBeX Corporate Clean Price fell 0.26 bps at 105.36 from the previous level of 105.64. Meanwhile, the yield on SUN 10Yr was at 7.83% from 7.62% and US Govn't bond 10Yr at 2.84% from 2.88% before, so the spread at the 498 level , 3 bps higher than the previous 473.6 bps.

While at the rate of corporate bond yields, the movement again moved up. In corporate bonds with AAA rating where the yield for tenor 9-10 moves up around 9.35% -9.45%. On the AA rating with tenor of 9-10 years in the range of 10.04% -10.06%. On the A rating with a tenor of 9-10 years in the range of 11.06% -11.10%, and on the BBB rating in the range of 13.96% -14.05%.