Global Market Update
• The benchmark 10-year UST note yield was closed at 2.87% on Wednesday (08/17/22).
• Fed’s minutes of meeting showed that US CB wont likely to pull back the interest rate hikes until inflation could be brought back at 2% level.
• However, Fed did not give a guidance for future interest rate hike and will be data driven to decide the path.
• US stock market fell, with DJI was down 0.5%; S&P 500 dropped 0.72% and Nasdaq Composite retreated 1.25%.
• On the other hand, UK CPI increased more than market has anticipated in last Jul-22 causing yield to jump.
• UK inflation hit 10.1% YoY, higher than consensus estimate at 9.7% YoY in Jul-22 caused by food and energy prices.
• UK’s actual inflation last month was the highest in the last 4 decades.
Domestic Market Update
• The benchmark 10-year Indo GB yield (FR0091) fell 6 bps to 7.00% on Tuesday (08/16/22).
• The IDR weakened against USD and was closed at IDR14,768/USD on Tuesday (vs IDR14,742/USD on Monday).
• Indonesia’s 5-year CDS recorded a slight increase to 98.65 bps on Tuesday (vs 97.59 bps on Monday).
•RAPBN 2023 state revenues/expenditures are pegged at IDR 2,444/3,042tn and implying a budget deficit of IDR598tn (-2.85% GDP).
• The key policy theme for the 2023 is fiscal consolidation to maintain a healthy and sustainable budget.
• The risks that the APBN still have to face in 2023 include: 1) the global economic slowdown; 2) continued global monetary tightening and 3) faster- than-expected decline in commodity prices.
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 7.00-7.20% for today.
• Attractive Indo GB series to be traded today : FR0063, FR0070, FR0077, FR0037, FR0090, FR0052, FR0085, FR0073, FR0054 and FR0091.
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