Global Market Update
• The 10-year UST yield retreated 2 bps to 2.70% on Wednesday (04/13/22) after inflation data release.
• Yield on US government bonds fell slightly 1-2 bps along the curve.
• US PPI jumped 11.2% YoY in Mar-22, above previous month figure and market consensus each at 10.3% YoY and 10.6% YoY.
• US stock market closed higher. DJIA rose +1.01%, followed by the S&P 500 (+1.12%) and Nasdaq (+2.03%).
• Wall Street appreciated along with the decline in the yield of 10 year UST note that boosted tech stock.
• UK inflation rate jumped 7% YoY in Mar-22, higher than previous month figure of 6.2% YoY and consensus estimate at 6.7% YoY.
• The Bank of Canada raised its target for the overnight rate by 50bps to 1% in line with market expectations.
• It was the second consecutive rate hike pushing borrowing costs to the highest in 2 years when the coronavirus pandemic started.
Domestic Market Update
• Yield on 10-year Indo GB increased by 3 bps to 6.91% on Wednesday (04/13/22) or +1 bps above our target range.
• The IDR slightly strengthened against USD and was closed at IDR 14.363/USD yesterday (vs IDR14,366/USD in the previous day).
• Risk premium which is reflected by the 5-year Indo CDS also rose to 87.96 bps from 87.73 bps.
• The Ministry of Finance reported that state revenues reached IDR302.42 trillion; state spending of IDR282.71 trillion as of Feb-21. Budget surplus of IDR19.71 trillion or +0.11%.
• We view positively the budget surplus until Feb-22. It is likely that the budget deficit in 2022 will be lower than last year and 2022 target pushing down the bond supply side risk.
• In addition, MoF also said to reduce debt issuance and utilize more from SAL to finance state budget.
Market Projection
• Given the recent development on global and domestic market, we expect the 10-year Indo GB yield to keep steady within a range of 6.80-6.90% for today.
• Attractive Indo GB series to be traded today: FR0070, FR0086, FR0090, FR000071, FR0078, FR0087, FR0091.
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