Company Update

05 Agustus 2022

Fixed Income Report August 5, 2022

Global Market Update
• The benchmark 10-year UST note yield declined 2 bps to 2.69% while the 2-year yield also fell 2 bps to 3.05% on Thursday (08/04/22).
• Yield curve inversion on UST note remained and the spread between longer an shorter maturity rate widened to -36 bps.
• Market participants keep an eye on US CPI rate for July-22. Some expect inflation will normalize in 2H22.
• Bank of England (BoE) raised interest rates by 50 bps, the highest in 27 years to 1.75%.
• BoE sees UK’s inflation to hit 13% and needs more aggressive interest rate hikes.
• BoE also warns that UK’s economy may fall into recession this year.
Domestic Market Update
• The benchmark 10-year Indo GB yield (FR0091) fell marginally by 1 bps to 7.20% on Thursday (08/04/22).
• IDR weakened against USD and was closed at IDR14,933/USD yesterday (vs IDR14,913/USD on the previous day).
• Indonesia 5-year CDS also slightly declined to 101.45 bps yesterday (vs 102.98 bps on the previous day).
• Indonesia's GDP growth is estimated at +5.17%/+5.22% YoY (consensus/MNCS) in 2Q22.
• GDP growth is estimated to continue to grow >5% YoY in 2Q22 in line with: 1) increase in economic activity/mobility; 2) household consumption; 3) FDI inflows and 4) continued trade balance surplus.
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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