Global Market Update
• The UST yield was down 2-5 bps along the curve on the last trading day of Friday (01/28/22).
• The 10-year UST yield dropped 3 bps to 1.77% while the 2-year UST yield also fell 2 bps to 1.16%. Meanwhile rate on 30-year UST yield was unchanged at 2.09%.
• US stock market rebounded last week. DJI increased 1.65%, S&P 500 jumped 2.44% while Nasdaq Composite lead all the gain with 3.13% appreciation.
• On the data front, US Personal Consumption Expenditure (PCE) rose 5.8% YoY in Dec-21.
• The PCE excluding food and energy was recorded at 4.9% YoY. Both figure marked the highest figure in 4Q21.
• In Europe, France and Spain preliminary 4Q21 GDP reading was recorded to exceeds expectation.
• France GDP expanded 5.4% YoY in 4Q21 (vs 3.5%YoY in 3Q21 and 4.2% YoY consensus estimate).
• Spain GDP grew 5.2% YoY in 4Q21 (vs 3.4% YoY in 3Q21 and 4.2% YoY consensus estimate).
• Meanwhile preliminary reading of Germany GDP in 4Q21 reported to grow 1.4% YoY below market consensus ay 1.8% YoY and previous quarter of 2.9% YoY.
Domestic Market Update
• The 10-year Indo GB yield inched up 1 bps to 6.45% on Friday (01/28/22) in line with our daily forecast range of 6.35-6.45%.
• The IDR value slightly depreciated against USD and was closed at IDR 14,388/USD (vs IDR14,386/USD on Thursday).
• Risk premium rose with Indonesia’s 5-year CDS stood at 90.88 bps (vs 89.23 bps on Thursday).
• Bank and Indonesia and People's Bank of China agreed to continue Bilateral Currency Swap Agreement (BCSA) and allowing the exchange between the two central banks up to CNY250bn or equivalent to IDR550tn.
• This policy is part of promoting bilateral trade and direct investment in local currency between two countries to maintain currency stability.
Market Projection
• Given the recent development, we expect the 10-year Indo GB yield to move within range of 6.35-6.45% today.
• Attractive Indo GB series to be traded today: FR0070, FR0084, FR0086, FR0082, FR0091.
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