Global Market Update
• The benchmark 10-year UST yield rose 1 bps to 2.40%. Yields on 2-10 year US government bond remained inverted last night (04/01/22).
• Spread between 2-10 year UST yield now stood at -2 bps and the inversion historically sending a recession signal for US economy.
• The yield curve inversion that occurred recently was the first time since it happen in 2019.
• Despite the yield curve inversion, US stock market started this week with a strong performance.
• Dow jones was up 0.30%; S&P 500 rose 0.81% while Nasdaq Composite jumped 1.90%.
• On the data front, US factory order contracted 0.5% MoM in Feb 22 and was in line with market expectation.
• Investors also keep watching on Russia-Ukraine conflict development as the peace talks continue.
Domestic Market Update
• Yield on 10-year Indo GB rose 1 bps 6.74% to start this week (04/04/22). Yields on IDR denominated government bond was up 1-3 bps along the curve.
• The IDR strengthened against USD to the level of IDR14,355/USD yesterday (vs IDR14,370/USD last week).
• Risk premium which is reflected by the 5-year Indo CDS also dropped significantly and closed at 76.63 bps (vs 84.75 bps in the previous day).
• On March 29, 2022, the Republic of Indonesia (the “Republic”) announced the successful completion of its second Tender Offer Exercise (the “Tender Offer” or “Liability Management Exercise”) launched on nine series of Notes (the “Old Bonds”).
• The government decided to repurchase global bonds with a total value of USD467.48 million with a total cash consideration of USD499.99 million.
Market Projection
• Government is scheduled to issue 6 series of sharia securities with indicative target set at IDR9tn through auction today. We think that it remains challenging as investor still on wait and see mode.
• 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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