Global Market Update
• Demand for save haven asset during heightened geopolitical tension rise. Majority of global sovereign bond yield saw a decreased last week.
• The attack on Ukraine nuclear power plant at the Zaporizhzhia by Russian army brought another concern that conflict may further to escalate.
• However UN’s nuclear watchdog said that radiation level and nuclear safety were not affected.
• Responding to the attack, US and its allies are considering banning Russian oil and gas imports.
• Oil prices continue to jump with Brent crude futures now hovering around USD125/bbl while US benchmark WTI topping USD122/bbl.
• The benchmark 10-year UST yield dropped 13 bps to 1.73% on Friday (03/04/22). Yields declined 3-13 bps along the curve.
• Wall Street fell in the last trading day last week. Dow Jones dropped 0.53%; S&P 500 declined 0.79% and Nasdaq Composite lost 1.68%.
• The index maker such as MSCI Inc, FTSE Russel and S&P Dow Jones are now planning to take out Russian equities from its indexes.
Domestic Market Update
• Following the recent worsening in global sentiment, majority of domestic government bond prices recorded a decline.
• The benchmark 5-year Indo GB yield rose 6 bps to 5.45% and its 10-year Indo GB yield jumped 11 bps to 6.66% on Friday (04/02/22).
• The IDR value slightly weakened against USD to the level of IDR14,387/USD on Friday (vs IDR14,384/USD previous day).
• Risk premium which is reflected by the 5-year Indo CDS jumped nearly 3 bps and now stood at 115.05 bps.
• Flows continued to come to Indonesia’s financial market. Based on BI report, foreign investors booked a net sell of IDR6.13tn in 1-2 March 2022.
• Foreign investors booked a net sell in government bond market of IDR8.30tn while recorded a net buy in equity market of IDR2.17tn.
• The outflows during high volatility in the global financial market caused government bond yield to rise.
• Bank Indonesia (BI) issued PBI No. 24/5/PBI/2022 regulating incentives for Banks that provide funds for certain and inclusive economic activities and this provision is effective from 1 March 2022.
• The incentive provided is in the form of easing the fulfillment of the Statutory Reserves in rupiah which must be met on average.
Market Projection
• Given the recent development on global and domestic market, we expect the 10 year Indo GB yield to move up within a range of 6.60-6.70% for today.
• Attractive Indo GB series to be traded today : FR0070, FR0077, FR0086, FR0090, FR0052 and FR0091.
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