Global Market Update
• Yields on the US treasury notes fell along the curve starting this week (04/3/2023).
• The short-term yield of 2-year notes declined 6 bps and fell below 4.0%. Whereas the benchmark 10-year notes fell 5 bps to 3.42%.
• US stock indices closed mixed last night. The DJI led all gain after appreciating 0.98%.
• Yet, US tech stocks proxied by Nasdaq Composite declined 0.27% reverting previous week gain.
• Despite experiencing a decline in government bond yield, some growth stock retreated amidst the fear of recession.
• US factory activities contracted for 5 consecutive months. US ISM manufacturing PMI decreased to 46.3 in Mar-23, marking the lowest level since May-20.
• US manufacturing PMI fell from Feb-23 of 47.7 and well below consensus estimate of 47.5.
• The continued decline in manufacturing activities triggers expectation that Fed would pivot soon.
Domestic Market Update
• The domestic LCY government bonds were traded up on Monday (04/3/2023).
• Yield on the benchmark 10-year (FR0096) slightly fell 1 bps to 6.76% on Monday.
• The IDR continued to strengthen against USD and finally closed below at IDR 14,981/USD yesterday.
• In addition, Indonesia’s 5-year CDS has also finally dropped to below 100 bps again and currently stood at 92.69 bps.
• Statistics Indonesia reported domestic monthly inflation increased 0.18% MoM, yet the annual pace of consumer prices index rose 4.97% YoY, below consensus estimate that expect still higher than 5% YoY.
• Furthermore, domestic CPI also experienced the lowest rate since Sep-22 and for the first time falling below 5% since 4Q22.
• Core CPI has consistently declining in the last two month and bringing it lower than 3% YoY annual pace.
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 6.70-6.90% for today.
• Attractive Indo GB series to be traded today : FR0063, FR0070, FR0077, FR0081, FR0085, FR0072, FR0076.
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