Global Market Update
• US treasury notes yield declined along the curve as inflation data came lower than expected.
• The benchmark 10-year UST note yield decreased 4 bps to 3.39% on Wednesday (04/12/23).
• Meanwhile, the benchmark 2-year UST note yield fell 7 bps and closed below 4% at the same time.
• Despite the decline in government bond yield, US stock price indices have not been re-rated.
• Most of the benchmark for equity indices fell. The DJI closed 0.11% lower. The S&P lost 0.41% whereas the Nasdaq Composite dropped 0.85%.
• US inflation recorded 0.1% MoM/5.0% YoY, lower than previous month of 0.4% MoM/6.0% YoY and lower than consensus estimate of 0.2% MoM/5.2% YoY.
• The annual inflation rate is consistently slowing down since 2H22 and now stood at the lowest pace since May-21.
• Yet, some of FOMC members still believe that inflation remains high and labor market remains tight and thus they anticipated that some additional policy firming maybe appropriate.
Domestic Market Update
• The domestic LCY government bonds were traded mixed on Wednesday (04/12/23).
• Yield on the benchmark 10-year (FR0096) fell 1 bps to 6.63% yesterday.
• The IDR continued to strengthen against USD and closed at IDR 14,880/USD.
• Indonesia’s 5 year CDS is consistently declining and now stood below 90 bps.
• Domestic retail sales increased 0.6% YoY in Feb-23 and is expected to further
expanding by 4.8% YoY in Mar-23.
• We expect the Ramadhan festive momentum will drive domestic demand and would be inflationary.
• However, the overall inflation remained manageable and thus firming BI stance to keep interest rate unchanged.
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 6.60-6.80% for today.
• Attractive Indo GB series to be traded today : FR0063, FR0070, FR0077, FR0081, FR0084, FR0072, FR0079, FR0083.
Disclaimer On
