Fixed Income Report April 17, 2024

Global Market Updates

• Wall Street equities closed with mixed results on April 16, with the DJI rose by +0.17%, the S&P 500 fell by -0.21%, and the Nasdaq closed down by -0.12%.
• US stock indexes exhibited a varied performance, with the S&P 500 hitting a 1-3/4 month low. Hawkish Fed comments drove the 10-year T-note yield to a 5-month high, dampening stocks. Strong Q1 earnings from UnitedHealth Group and Morgan Stanley boosted market sentiment. Chip stock strength lifted technology stocks, while support came from the IMF's raised 2024 global GDP forecast to 3.2%.
• US Treasury 10-yr yields surged by +4.0 bps to 4.67%, and 2-yr yields rose by +4.0 bps to 4.97%. Recent comments by Fed Chair Powell regarding the strength of the labor market and progress on inflation further boosted the 10-yr T-note yield.
• In March, US housing starts declined by -14.7% MoM to a 7-month low of 1.32mn, falling short of expectations of 1.48mn. Building permits, a proxy for future construction, also dropped by -4.3% MoM to 1.45mn, below expectations of 1.51mn.
• Meanwhile, US March manufacturing production increased by +0.5% MoM, surpassing expectations of +0.2% MoM. This indicates robust activity in the manufacturing sector.
• From Asia, China Q1 GDP rose by +5.3% YoY, exceeding expectations of +4.8% YoY. March's industrial production surged by +4.5% YoY and retail sales up by +3.1% YoY fell short of expectations, signaling potential challenges ahead.
• Global bond yields moved higher on Tuesday; The German bond yield closed up by +4.6 bps at 2.48%, the UK 10-yr gilt yield rose by +5.8 bps to 4.29% and the Japanese 10-yr JGB yield ended up +0.90 bps at 0.88%.

 Domestic Market Updates

• Indonesian benchmark series of LCY government bonds closed lower on April 16, with the 10-yr benchmark yield spiked by +21.43 bps to 6.87%, while the 2-yr yield jumped by +17.04 bps to 6.51%.
• The IDR tumbled against the USD at Tuesday’s close (USD/IDR rose by +2.08% to 16,175). The Rupiah weakened alongside major Asian currencies. JCI dropped by -3.02% at the opening of trading, with geopolitical tensions in the Middle East fueling a significant sell-off in both stocks and bond markets.
• Moody's rating agency reaffirmed Indonesia's Sovereign Credit Rating at Baa2, one notch above investment grade, with a stable outlook on April 16, 2024. This affirmation underscores Indonesia's macroeconomic resilience and growth amid global slowdowns, sending a positive signal to the international community.
• In Tuesday's Indo-GB series trading, FR0100 and FR0101 garnered considerable interest in outright transactions, with substantial trade volumes of IDR3.74tn and IDR2.78tn, respectively. Additionally, FR0097, FR0100, and FR0091 experienced high trading frequency.

 Market Forecast

• Given the recent developments that unfolded within the global and domestic markets, we expect the 10-yr Indo GB yield to move within the range of 6.65-6.85% for today.
• Attractive Indo GB series to be traded today: FR0081, FR0095, FR0101, FR0082, FR0096, FR0098.

 Disclaimer On

FR81 FR95 FR101 FR82 FR96 FR98