Global Market Update
• The 10-year UST yield jumped 6 bps to 2.66% and again hitting its highest level in the last 3 years on Thursday (04/07/22).
• Meanwhile the 2-year counterpart fell slightly 1 bps to 2.46% and now the spread between 2-10 year widened to +20bps after previously inverted.
• Based on FOMC minutes of meeting, Fed officials plan to reduce bond holding on its balance sheet by USD95 bn/month.
• Furthermore, they also plan to increase 1 or 2x 50 bps interest rate to fight against high inflation.
• US stock market rebounded. DJI was increased 0.25%; S&P 500 was up 0.43% and Nasdaq Composite rose marginally 0.02%.
• US growth stocks such as in tech sector continuously showing its high sensitivity to higher interest rates.
• On the data front, US fillings on initial jobless claims as at April 02 decreased 5k from the previous week to 166k, a level not seen since 1968.
Domestic Market Update
• Yield on 10-year Indo GB slightly decreased by 1 bps to 6.77% on Thursday (04/07/22).
• The IDR continued to weaken against USD to the level of IDR14,362/USD yesterday (vs IDR14,359/USD in the previous day).
• Risk premium which is reflected by the 5-year Indo CDS also rose to 81.34 bps (vs 81.05 bps in the previous day).
• Bank Indonesia reported FX reserves position stood at USD139.1 bn as at end Mar-22 or declining USD2.3 bn from previous month.
• The decline in FX reserves was attributable to government external debt payment.
• However FX reserves remained high, equal to 7.2 months imports or 7.0 months import and external debt payment, therefore supporting Indonesia’s external stability
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 6.75-6.85% for today.
• Attractive Indo GB series to be traded today : FR0070, FR0086, FR0090, FR000071, FR0078, FR0087, FR0091.
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