Global Market Update
• The benchmark 10-year UST note yield slightly fell by 2 bps to 2.88% on Thursday (08/18/22).
• Meanwhile the benchmark 2-year UST note yield declined by 9 bps to 3.20% at the same time.
• Spread between 2/10-year UST note yield narrowed to -32 bps from previously -39 bps.
• US stock market rose, with DJI increased marginally by 0.06%, whereas S&P 500 and Nasdaq Composite rose by 0.23% and 0.21% respectively.
• 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.
• Elsewhere, the benchmark 10-year UK government bond yield continue to rise after CPI hit >10% at annual pace.
Domestic Market Update
• The benchmark 10-year Indo GB yield (FR0091) rose 3 bps to 7.03% on Thursday (08/18/22).
• The IDR weakened against USD and was closed at IDR14,837/USD on Tuesday (vs IDR14,768/USD on Tuesday).
• However, Indonesia’s 5-year CDS recorded a slight decrease to 103.03 bps yesterday (vs 103.39 bps previously).
• Pressure from external sentiment gradually ease and now market sentiment shifted to domestic policy making particularly waiting for BI’s decision on interest rate.
• We expect an increase of 25 bps hike on BI’s Aug-22 meeting on the back of rising inflation and IDR depreciation.
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, FR0044, FR0090, FR0042, FR0047, FR0052, FR0085 and FR0091.
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