Global Market Update
• The benchmark 10-year UST note yield rose to a near of 2% on Wednesday (02/23/22).
• Even with the recent escalation of Russia-Ukraine conflict, the safe haven asset price dropped.
• 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.
• After US and UK, EU also announced economic sanctions against Russia.
• The conflict has triggered higher energy price. This could potentially translate into higher inflation.
• Market now expect that Fed rate hike in Mar-22 is likely with the probability of 100%.
• US equity continued to tumble. DJI and S&P 500 each fell 1.38% and 1.84%. Meanwhile Nasdaq Composite declined 2.57%.
• In Euro Area, inflation rose +0.3% MoM/+5.1% YoY in Jan-22, in line with consensus estimate but marking the highest jump in the last 25 years.
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 1 bps to 5.33%.
• The IDR value was appreciated against USD to the level of IDR14,338/USD yesterday (vs IDR14,366/USD on the previous day).
• Meanwhile risk premium also decrease to 98.89 bps on Wednesday from 101.26 bps on Tuesday.
• On the data front, Bank Indonesia (BI) reported broad money supply grew 12.9% YoY to IDR7,634.4tn in Jan-22. Albeit the lower growth compared to previous month, liquidity has remained ample.
• Growth in M2 was influenced by : 1) M1 acceleration (+17.1% YoY) and 2) growth of quasi+ money (+8.2% YoY) in Jan-22. The growth was also in line with credit expansion which recorded a growth of 5.5% YoY.
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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