Global Market Update
• US short term and long term rate inverted last week. The 10-year UST yield rose 5 bps to 2.39% while the 2-year benchmark increased to 2.46%.
• Overall, yields rose 1-16 bps along the curve, with the shorter tenor jumped higher than the longer maturity.
• US stock market closed higher on the last trading day of previous week with DJI (+0.40%); S&P 500 (+0.34%); Nasdaq Composite (+0.29%).
• On the data front, US recorded a strong job market. Unemployment continued to fall to 3.6% in Mar-22, lower than previous month and consensus estimate at 3.8% and 3.7%.
• However US non-farm payrolls increased 431k, significantly lower than previous month of 750k and below consensus estimate at 490k.
• US ISM manufacturing PMI also decelerated to 57.1 in Mar-22 vs 58.6 in Feb and also lower than market expectation to be at 59.
• In Euro Area, flash inflation figure jumped 7.5% YoY in Mar-22, higher than previous month and market forecast each at 5.9% YoY and 6.6% YoY.
Domestic Market Update
• Yield on 10-year Indo GB stayed at 6.73% on Friday (04/01/22). The IDR GB prices were unchanged and showing a sideways move.
• The IDR weakened against USD to the level of IDR14,370/USD last week (vs IDR14,363/USD in the previous day).
• Risk premium which is reflected by the 5-year Indo CDS also rose and was at 84.75 bps last week (vs 84.00 bps in the previous day).
• Indonesia's inflation recorded an increase of +0.66% MoM/+2.64% YoY on Mar-22 and became the highest inflation since May-20.
• This development was mainly influenced by inflation of red chili, cooking oil, and broiler eggs, along with constraints in several main production centers, the lift off policy of the Highest Retail Price (HET) for simple and premium cooking oil packaging, as well as the increase in feed production costs.
Market Projection
• Given the recent development on global and domestic market, we expect the 10 year Indo GB yield to keep steady within a range of 6.70-6.80% for today.
• Attractive Indo GB series to be traded today : FR0086, FR0090, FR000064, FR0078, FR0087, FR0091.
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