Global Market Update
• Yield on UST note jumped 8-20 bps along the curve on Tuesday (08/02/22).
• Yield on benchmark 10-year UST note rose 17 bps to 2.75% while the shorter rate, 2-year UST note yield was up by 18 bps to 3.05%.
• Spread between shorter and longer maturity remained in negative territory and stood at -30 bps recently.
• Fed’s official commented that US CB may increase FFR by 50-75 bps in the next meeting if the inflation continue to tick lower.
• US stock indices fell with DJI declined by 1.23%; S&P 500 dropped by 0.67% and Nasdaq Composite was closed 0.16% lower from previous day.
Domestic Market Update
• The benchmark 10-year Indo GB yield (FR0091) rose 9 bps to 7.20% on Tuesday (08/02/22).
• IDR weakened against USD and was closed at IDR14,889/USD yesterday (vs IDR14,873/USD on the previous day).
• Indonesia 5-year CDS rose to 106.08 bps yesterday (vs 102.78 bps on the previous day).
• Government has issued IDR19.1tn worth of GDS yesterday, in-line with the indicative target of IDR15.0-22.5tn.
• The total incoming bids were recorded higher amounting at IDR36.9tn yesterday (vs IDR29.5tn on July, 19) driven by easing pressure on the yields.
• Outflows from domestic financial markets were amounting at ~IDR30tn in July-22. The largest contributor remained from the SBN market (~IDR28tn) while outflows from equity market amounted ~IDR2tn.
• Outflows pressure was triggered by Fed's aggressive monetary tightening. However, we expect outflows to ease in the short term in-line with: 1) externally priced-in factors; 2) possibility of BI to increase 7-day reverse repo +25 bps in Aug-22 & 3) GDP data release +5% YoY in 2Q22
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 7.10-7.30% 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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