Global Market Update
• US market was closed on Monday (02/21/22) commemorating Washington’s Birthday.
• However markets remain focus on the development of Russia-Ukraine crisis as well as Fed’s monetary policy.
• Russian President Vladimir Putin ordered troops into two breakaway regions of eastern Ukraine.
• Putin also said that Western governments have made hostile activities that threaten Russian security.
• Heightened geopolitical conflict could bring another pressure for the market.
• On the other hand, based on CME futures contract market expect US central bank to raise interest rate by 25 bps in Mar-22 with the probability of 82.8%.
• In Asia, Japan Jibun Bank Manufacturing PMI flash reading for Feb-22 came to 52.9 below previous month figure of 55.4.
• PBoC decided to keep interest rate unchanged with loan prime rate for 1Y & 5Y steady at 3.7% and 4.6%.
Domestic Market Update
• Domestic government bond yields were flattish to start this week (02/21/22).
• The benchmark 10-year Indo GB yield stayed 6.49% while 5-year Indo GB yield slipped 1 bps to 5.30%.
• The IDR value stayed the same at IDR14,328/USD, while risk premium continued to increase to 98.53 bps.
• Government successfully issued ORI021 with the record of the lowest coupon (4.9%) and the highest retail investor participation (56,238 investors).
• We believe this is a good news that strengthening domestic investor basis could help government finance its budget while at the same time could support domestic market to become more stable.
Market Projection
• Government is scheduled to conduct sharia securities auction with the indicative target set at IDR11tn today.
• We expect government to successfully raised funding from sharia securities issuance. However we predict that the incoming bids could be lower than previous auction with the robust demand towards shorter maturity securities amid rising interest rate and geopolitical risk.
• 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, FR0054 and FR0091.
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