Global Market Update
• The 10-year UST yield rose to its highest level since May-19 to 2.55% on Tuesday (04/05/22).
• Meanwhile the 2-year counterpart rose to 2.52% and now the spread turned to +3bps after previously inverted.
• The move in US government bond market came after Fed’s Governor Lael Brainard signaled more aggressive monetary tightening.
• Brainard said that US central bank need to reduce the size of its balance sheet at a rapid space and raising interest rate to fight against high inflation.
• US stock market tumbled after gaining in the last 2 days. DJI was down 0.8% while S&P 500 and Nasdaq Composite each fell by 1.3% and 2.3%.
• Meanwhile on the data front, US ISM non-manufacturing PMI rose to 58.3 in Mar-22, higher than in the previous month at 56.5 yet remained in line with consensus estimate.
• Elsewhere in Japan, the country reported Jibun Bank Composite PMI final reading at 50.3 in Mar-22 higher than previous month figure at 45.8 and higher than consensus estimate at 49.3.
• On the war development, Ukraine President addressed the UN Security Council to further investigate and prosecute Russian war crimes.
Domestic Market Update
• Yield on 10-year Indo GB stayed flat at 6.74% on Tuesday (04/05/22).
• The IDR strengthened against USD to the level of IDR14,347/USD yesterday (vs IDR14,355/USD in the previous day).
• However, risk premium which is reflected by the 5-year Indo CDS rose to 77.72 bps (vs 76.63 bps in the previous day).
• Government has issued 6 series of sharia securities worth of IDR8.1 tn yesterday. The total incoming bids were IDR18.1 tn or higher than in previous auction at IDR13.4 tn.
• However investors appetite remained toward shorter maturity fixed income asset as indicated by incoming bids to SPNS04102022 that reached IDR8.2 tn yesterday.
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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