Global Market Update
• Russia-Ukraine conflict has kept UST yield to steady. The benchmark 10- year UST yield was closed at 1.94% on Tuesday (02/23/22).
• Vladimir Putin previously has ordered troops into two breakaway regions of eastern Ukraine after announcing that he would recognize the independence of Donetsk and Luhansk.
• Following the development, Western World started to give economic sanctions to Russians.
• President Joe Biden imposed sanctions on Russian bank VEB and its military bank, Russia’s sovereign debt and wealthy individuals as well as families.
• UK started to follow the suit, imposing sanctions against 5 Russian banks and 3 wealthy individuals.
• Given the escalation of geopolitical tension, US equity market fell to start this week. DJI dropped 1.42%; S&P 500 declined 1.02% and Nasdaq Composite fell 1.23%.
Domestic Market Update
• Domestic government bond yields were mixed yesterday (02/23/22).
• The benchmark 10-year Indo GB yield stayed 6.49% while 5-year Indo GB yield rose 2 bps to 5.32%.
• The IDR value depreciated against USD to the level of IDR14,366/USD yesterday (vs IDR14,328/USD on the previous day).
• Meanwhile risk premium continued to increase to 101.26 bps on Tuesday (vs 98.53 bps on Monday).
• Government successfully issued 6 series of sharia securities on yesterday's auction with the total fund raised IDR9tn or lower than indicative target of IDR11tn.
• Demand for fixed income asset in primary market remained high as the incoming bids value were IDR33.51tn.
• However strong demand remained towards shorter maturity securities on the back of rising interest rate risk as we have expected. Bids on SPNS09082022 reached IDR21.47tn or the highest among other series.
• It is also worth noted that lower awarded value reflect lower government financing needs.
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, FR0054 and FR0091.
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