Global Market Update
• Hopes on geopolitical tension de-escalation triggered higher UST yields. US government bond yield rose 4-8 bps along the curve.
• The 2-year UST yield stayed flattish at 1.58%, while benchmark 10-year UST yield rose nearly 6 bps to 2.04% on Tuesday (02/15/22).
• Russian Defense Ministry said the country had begun to return their troops to their base after rising tension near Ukrainian border.
• However yields on US government bond remained 10-23 bps higher than last week position.
• Focus still on potential more aggressive monetary tightening after Fed’s official reiterated front loading strategy is needed to combat high inflation.
• On the data front, US PPI jumped +1.0% MoM/+9.7% YoY in Jan-22, higher than consensus estimate at +0.5% MoM/+9.1% YoY.
• US stock market rebounded last night. DJI and S&P 500 jumped more than 1% while Nasdaq Composite lead the gain and was up 2.53%.
• Euro Area 2 nd estimate of GDP growth rate recorded an expansion of +0.3% QoQ/+4.6% YoY in 4Q21 and it was in line with market expectation.
Domestic Market Update
• Domestic government bond market was mixed yesterday. However, overall yields remained flattish along the curve on a day to day basis.
• The benchmark 10-year Indo GB yield stayed at 6.50% while 5-year Indo GB yield rose 1 bps to 5.32% at the same time.
• The IDR value continue to strengthen against USD and was closed at IDR 14.303/USD on Tuesday (vs IDR 14.323/USD in the previous day).
• Furthermore, country’s risk premium dropped. The 5-year Indo CDS slipped 2 bps to 97.67 bps.
• From the pandemic side, domestic Covid-19 daily infections soared to 57,049 cases and marking the highest daily cases since pandemic began.
• Government successfully raised funding amounting to IDR23tn in yesterday’s auction. However the issuance was lower than indicative target of IDR25tn.
• As we have expected before, shorter maturity securities had the strongest demand with SPN03220518 and SPN12230203 booked more than IDR41tn incoming bids or equal to 53.66% of total incoming bids of IDR76.77tn.
• On the data front Indonesia’s exports and imports in Jan-22 rose 25.31% YoY and 36.77% YoY respectively translating to trade balance surplus of USD0.93bn.
Market Projection
• Given the recent development on global and domestic market, we expect the 10 year Indo GB yield to move within a range of 6.45-6.55% for today.
• Attractive Indo GB series to be traded today: FR0070, FR0090, FR0071, FR0078, FR0052 and FR0091.
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