Global Market Update
• The benchmark 10-year UST note yield fell by 7 bps to 2.76% on Tuesday (08/08/22).
• Yield curve remained inverted, with the 2-year UST note yield closed at 3.21% meaning that spread between short term and long term interest rate stood at -45 bps.
• Albeit there will be no FOMC meeting in Aug-22, market participants expect that Fed to raise another 75 bps in Sep-22.
• According to CME FedWatch Tools, the probability of Fed to raise FFR to 300-325 bps is at 63.5% for Sep-22 meeting.
• DXY index indeed fell from the peak at 108.54 on July 14, 2022. However DXY is still hovering above 105.
• On the other hand, market participants also keep an eye on US CPI data release this week, with the consensus estimate inflation to increase by +8.7% YoY.
• In the commodity market, Brent crude price has declined to below USD100/bbl recently.
Domestic Market Update
• The benchmark 10-year Indo GB yield (FR0091) fell by 2 bps to 7.12% on Monday (08/08/22).
• The IDR strengthened against USD and was closed at IDR14,878/USD on Monday (vs IDR14,893/USD last week).
• After recording a massive outflows, foreign ownership of SBN increased by >IDR10tn during the period of July 31 – August 8.
• Market pressure started to ease as there is no Fed meeting in Aug-22 and US CPI is expected to increase by +8.7% YoY in July 22, lower than previous month of +9.1% YoY.
• On the data front, Bank Indonesia reported Consumer Confidence Index (CCI) was at 123.2 on July-22, lower than the previous month at 128.2.
• Consumers remain optimistic despite the decline in the Current Economic Condition Index (IKE) and the Economic Condition Expectation Index (IEK).
• The decline in CCI sub-indices was in-line with the increasing risk of a global economic slowdown and rising domestic inflationary pressures.
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
Disclaimer On
