Global Market Update
• The benchmark 10-year UST note yield rose by 3 bps to 3.01% on Monday (08/22/22).
• Meanwhile the benchmark 2-year UST note yield also increased by 7 bps to 3.31% at the same time.
• The spread between 2/10-year UST note yield widened to -30 bps from previously -26 bps.
• US stock indices posted a significant decline on Monday. DJI fell 1.91%, whereas S&P 500 and Nasdaq Composite dropped by 2.14% and 2.55% respectively.
• Market move ahead of Fed’s Chair Powell statement on Jackson Hole Symposium this week.
• Unlike Western CBs that are expected to continue rate hikes, PBoC decided to lower its 1-year LPR by 5 bps to 3.65% in Aug-22.
Domestic Market Update
• The benchmark 10-year Indo GB yield (FR0091) rose 7 bps to 7.15% on Monday (08/22/22).
• The IDR weakened against USD and was closed at IDR14,888/USD on Monday (vs IDR14,838/USD on Friday last week).
• Indonesia’s 5-year CDS also increased to 115.38 bps on Monday (vs 109.01 bps on Friday last week).
• Consensus estimates that Bank Indonesia (BI) will still maintain its benchmark 7-day reverse repo rate at 3.5%.
• The pressure on global financial markets is indeed easing in early Aug-22. However, the IDR is still depreciating against the USD and inflationary pressures are still likely to increase in the future.
• The urgency to raise the benchmark interest rate as a pre-emptive measure to maintain stability is still needed soon.
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 7.05-7.25% for today.
• Attractive Indo GB series to be traded today : FR0063, FR0044, FR0042, FR0052, FR0085 and FR0091.
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