War between Russia-Ukraine continued with western countries try to sanction Russian economy.
Recently US plan to ban Russian oil imports. This results in higher oil price.
The jump in oil price has sparked fear around investor that US high inflation may persist longer and causing the economy to stagflation.
US key inflation data is scheduled to release on Thursday (03/10/22). Market expect Feb-22 CPI to jump +0.60% MoM/+7.90% YoY, the highest since 1982.
The increase in oil price also affected Japan’s economy. Japan reported to book the biggest current account deficit since 2014 as oil imports cost surged.
UST yield jumped 2-7 bps along the curve with its 10-year benchmark rate rose by 4 bps to 1.78% last night.
Wall Street booked another disappointing performance. The 3 indexes were down more than 2% with Nasdaq composite suffered the most after loosing 3.62% of its value.
Fitch ratings downgraded Belarus’ sovereign rating to CCC from B citing the impact from sanctions over the country’s role in the Russian invasion to Ukraine
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 10 bps to 5.55% and its 10-year Indo GB yield jumped 9 bps to 6.75% on Monday (07/02/22).
The IDR value weakened against USD to the level of IDR14,415/USD to start this week (vs IDR14,387/USD last week).
Risk premium which is reflected by the 5-year Indo CDS jumped nearly 11 bps and now stood at 126.29 bps.
Market Projection:
Government is scheduled to conduct sharia securities auction for 6 series with lower indicative target set at IDR9tn today.
We expect demand to slightly affected by global sentiment, however the target is achievable which we see investors are gravitating towards shorter maturity.
Indonesia's FX reserves data for Feb-22 is scheduled to be released by Bank Indonesia (BI) today.
We expect FX reserves position to slightly increase to USD142bn from USD141.3bn in Jan-222 on the back of : 1) strong exports performance and 2) massive inflows particularly to equity market.
Given the recent development on global and domestic market, we expect the 10 year Indo GB yield to up within a range of 6.70-6.80% for today.
Attractive Indo GB series to be traded today : FR0070, FR0077, FR0086, FR0090, FR0052 and FR0091.
