Global Market Update
• The benchmark 10-year UST note yield declined by 8 bps to 3.03 on Thursday (08/25/22).
• Meanwhile the benchmark 2-year UST note yield fell by 2 bps to 3.37% at the same time.
• The spread between 2/10-year UST note yield widened to -29 bps from previously -28 bps.
• US stock indices increased with DJI rose 0.98%; S&P 500 was up 1.41% while Nasdaq Composite gained 1.67%.
• Market participants will seek a clue from Fed’s Chair Powell speech on the future of US interest rate policy.
• In Asia, Bank of Korea increased its base rate by 25 bps to 2.5% in Aug-22 meeting, in-line with consensus estimate citing high inflationary pressures & high inflation expectation.
• Previously, in Jul-22, Bank of Korea has taken an unprecedented 50 bps rate hike as its monetary authority seek to prevent capital outflows amidst Fed’s aggressive rate hikes.
Domestic Market Update
• The benchmark 10-year Indo GB yield (FR0091) increased marginally by 2 bps to 7.05% on Thursday (08/25/22).
• The IDR strengthened against USD and was closed at IDR14,825/USD on Thursday (vs IDR14,848/USD on Wednesday).
• Indonesia’s 5-year CDS declined by 4.2 bps to 102.79 bps on Thursday.
• The domestic SBN market recorded an inflow of IDR19.31 trillion in the period 1-24 August 2022.
• Inflow into the SBN market is a positive catalyst for government bond market resulting in a downward trend in SBN yields.
• Inflows returned to the SBN market in response to BI's decision to raise the benchmark interest rate by 25 bps.
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, FR0042, FR0052, FR0085 and FR0091.
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