Global Market Update
• The benchmark 10-year UST note yield rose by 4 bps to 3.06% on Tuesday (08/23/22).
• Meanwhile the benchmark 2-year UST note yield dropped marginally by 1 bps to 3.30% at the same time.
• The spread between 2/10-year UST note yield narrowed to -24 bps from previously -30 bps.
• US stock indices continued to decline on Tuesday. DJI fell 0.47%, whilst, S&P 500 lost 0.22%.
• Market move ahead of Fed’s Chair Powell statement on Jackson Hole Symposium this week.
• On the data front, US new home sales plunged 12.6% MoM to a seasonally adjusted annualized rate at 511k in Jul-22, below consensus forecast at 575k and the lowest since Jan-16.
Domestic Market Update
• The benchmark 10-year Indo GB yield (FR0091) declined by 5 bps to 7.10% on Tuesday (08/23/22).
• The IDR strengthened against USD and was closed at IDR14,838/USD on Tuesday (vs IDR14,888/USD on Monday).
• IDR appreciation occurred after Bank Indonesia (BI) decided to raise 7-day reverse repo rate by 25 bps to 3.75% in Aug-22 meeting.
• BI monetary policy response is in-line with our expectation as pre-emptive policy is needed to anchor inflation and maintaining IDR stability.
• On the other hand, government has issued IDR12.1tn of SBSN in yesterday’s auction.
• The awarded value was higher than indicative target set at IDR9.0tn despite having lower incoming bids value at IDR28.5tn yesterday (vs IDR30.9tn in the previous auction).
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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