Global Market Update
• US treasury notes yield recorded a decline compared to a week ago. Yields fell 8-33 bps along the curve on a weekly basis.
• The benchmark 10-year UST note yield dropped 12 bps on a daily basis to 3.40% on Tuesday (04/25/23).
• US equity indices recorded a significant correction yesterday. All the benchmark indices fell more than 1% with Nasdaq Composite led the correction after plunging nearly 2%.
• Equity indices dipped in red despite yield on the government bond fell as banking turmoil fear returns.
• The fears came after First Republic Bank reported that its deposits dropped 40% to USD104.5bn in 1Q23.
• Markets were concerned that the bank would face the same fate as SVB and Signature Bank.
• In order to restructure the balance sheet First Republic Bank is reported to sell as much as USD100bn of loans and securities. In addition, it also plan to reduce the headcount by 20-25% in 2Q23.
Domestic Market Update
• Domestic financial market will resume its trading today after coming back from Eid Fitr holiday season.
• However we expect market liquidity to remain low as government appeal that private sectors need to compensate holiday extension to avoid the likelihood of severe traffic due to Eid return.
• The LCY government bond price slightly corrected last week before holiday momentum and the benchmark 10-year (FR0096) yield closed at 6.65%.
• The IDR depreciated to 14,845/USD on April 18, 2023 or declining 0.37% from previous day position.
• At the same time sovereign credit risk reflected by 5-year CDS also returning to above 90 bps again.
• Bank Indonesia (BI) kept the interest rate unchanged at 5.75% on April 2023 meeting as widely expected and holding the policy rate for 3 consecutive meetings.
• Furthermore, BI sees Indonesia’s economy to remain resilient and domestic output is projected to grow slightly above 5% in 1Q23.
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 : FR0070, FR0077, FR0081, FR0084, FR0086, and FR0088.
Disclaimer On
