HIGHLIGHTS
- On August 5, 2024, the yield on 10-year Indonesian government bonds decreased to 6.803%, down from 6.846% the previous day. Meanwhile the 10-year UST yield fell to 3.78%, from 3.80% the day before.
- The trading volume for government bonds reached IDR 44.42 trillion, with a predominance of short-term maturities (less than 5 years). This represents an increase from the previous day's volume of IDR 39.43 trillion but is slightly below the year-to-date average of IDR 44.83 trillion. The outright transactions amounted to IDR 13.96 trillion, up from IDR 11.64 trillion the day before.
- The total volume of corporate bond transactions was IDR 1,079 billion, also dominated by short-term maturities (less than 5 years). This volume is an increase from IDR 526 billion recorded the previous day but remains below the year-to-date average of IDR 1,983 billion. Outright transactions in corporate bonds totaled IDR 1,024 billion, up from IDR 526 billion the previous day.
- The Rupiah appreciated by 0.09% against the US Dollar, strengthening to IDR 16,185 from IDR 16,200. Meanwhile, the Jakarta Composite Index (JCI) fell by 3.40%, declining from 7,308 to 7,060. Brent crude oil prices decreased from USD 81.77 to USD 78.21 per barrel, while WTI Cushing Crude Oil Spot prices fell from USD 76.31 to USD 73.52 per barrel.
GLOBAL UPDATES
- US Service PMI rose to 51.4 in Jul-24, reversing the contraction seen in Jun with a PMI of 48.8. New orders recovered significantly, while demand from foreign expanded. Service accounted for a third of US economy. (Trading Economics)
DOMESTIC UPDATES
- Indonesia's GDP expanded by 5.05% y-y in Q2 2024 , inline with our expectations of 5.00% (vs. consensus of 4.99%). Household consumption growth remained subdued at 4.9%, matching Q1's growth rate, but was offset by an acceleration in Gross Fixed Capital Formation (GFCF) to 4.4% y-y (vs. 3.8% in Q1). Government consumption growth dipped significantly to 1.4% y-y (vs. 19.9% in Q1), falling well below our estimates. Net export growth surged to 6.9% y-y, following a contraction of -1.1% in Q1.
- Nominal GDP improved to 5.95% y-y in Q2 (vs. 4.28% in Q1), leading to GDP deflator inflation of 0.9% y-y, the first increase since Q3 2023. Export prices increased for the first time since Q1 2023, benefiting the export sectors.
- Manufacturing, the largest sector in GDP, grew by 4% y-y, relatively unchanged from Q1 and Q4 2023. Its contribution to overall GDP also steadied at around 19%. Manufacturing growth was led by Food Products and Beverages at 5.5% y-y, Chemical and Pharmaceuticals at 8% y-y, and Base Metals at 16.6% y-y. The manufacturing of Coal and Refined Petroleum Products extended its annual decline to 2.8% y-y.
- Going forward, we revised our GDP projection to 5.06% in FY24 , a slight revision from 5.05% in the our previous estimate. The upward revision came from better net export figure in 2Q. Household Consumption is downwardly revised to 5.0% from 5.1% on the back of subdued 2Q figure. (BPS, BRIDS)
- The government will hold an auction for Government Bonds (SUN) on Tuesday, August 6, 2024. The series to be offered in this auction include SPN03241106 (New Issuance), SPN12250807 (New Issuance), FR0101 (Reopening), FRSDG001 (Reopening), FR0103 (New Issuance), FR0098 (Reopening), FR0097 (Reopening), and FR0102 (Reopening). The government has set a target of IDR 22 trillion, with a maximum target of IDR 33 trillion for this auction. In the Government Securities auction held on July 23, 2024, incoming bids totaled IDR57.15 trillion, marking an increase from IDR48.35 trillion in the previous auction on July 09, 2024. The nominal amount won in this auction was IDR22 trillion, matching the government's target but lower than the IDR24 trillion won in the previous auction. Consequently, the bid-to-cover ratio for this auction stood at 2.60x. BRI Danareksa Sekuritas projects an estimated range for the upcoming auction's total incoming bids between IDR45 trillion and IDR55 trillion, with an expected bid-to-cover ratio ranging from 2.05x – 2.50x. (DJPPR, BRIDS Estimated)
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