JCI and Yield Indonesia 10Yr are looking goodComposite is about to start its long term Uptrend while id10y is continuing Downtrend
ID10Y
When Stock Market and Bond Market move South togetherComposite Index is still moving sideways but it has potential to continue upward direction.
ID10Y or Bond also is breaking out the down trendline which mean the yield is continuing upward direction too.
Composite is Bullish, ID10Y is Bearish.
The Spread Between ID10Y and US10Y Might Be LargerID10Y tend to rise to 9 :
But US10Y tend to fall below zero level following other developed countries Bond Yield :
I believe the spread between ID10Y and US10Y will be larger and might breach the highest spread since 2015 at this current spread of 7.5%.
I don't believe the spread could reach a level in 2009 (a recovery after GFC) but the spread could easily reach 9% - 10%.
ID10Y to continue DowntrendID10Y ends Pullback by falling from near-Resistance at 7.45%.
This is one of the characteristics of Pullback.
A pullback is also a confirmation that Downtrend is imminent.
I predict ID10Y will continue its Downtrend until it reaches 6.5%.
Yield Indonesia Bond 10 Yr should fall soonThe spread between Indonesia Bond 10Yr with US Treasury 10Yr reached the highest level since the end of 2016. The spread is now at 5.8% wherein the beginning of 2018, the spread is only at 3.6% and 5.4% at the beginning of 2019.
The latest increase of the spread (since Jul'19) is caused by the falling of UST 10Yr at high speed (from 2.1% to 1.5% in just a month!). Investor seems worried that the recession is cooking so they bought Risk-Free Asset such as Government Bond.
The yield of US Treasury 10Yr (now at 1.55%) is soon to meet the lowest level in 2016 at 1.4%. This level is so low that it should act as Support (to hold further falling). Once the yield reached 1.4% (and assuming the Yield of Indonesia Bond 10Yr is still around 7.4%) that makes the spread rise to 6%.
Judging by Indonesia is already at higher Investment Grade level (thanks to recent rating upgraded by S&P to BBB from BBB-) and the proposed government budget for 2020, the should be a Buying Interest soon for Indonesia asset. I believe Yield Indonesia Bond 10Yr could fall to 6.5% or at least 7% from current level at 7.4%.
