Global Market Update
• Majority yield on the benchmark of UST notes slightly decreased yesterday as recession risk looming.
• Yield on the benchmark of 10-year UST note dropped 3 bps to 3.45% on Thursday (12/15/22).
• Yield on the short term bond (UST 2-year) increased 2 bps to 4.23% bringing 2/10-year spread widened to -78 bps vs -73 bps previous day.
• US equity market fell sharply yesterday. The DJI was down 2.25%; S&P 500 decreased 2.45% and Nasdaq Composite was 3.23% lower.
• Market responded to weaker than expected retail sales that plunged 0.6% MoM in Nov-22 (vs 1.3% MoM increase in Oct-22).
• The Fed now expects interest rates to reach 5.1% next year, 4.1% in 2024, and 3.1% in 2025, a higher level than previously indicated as they see potentially higher inflation.
Domestic Market Update
• The benchmark 10-year Indo GB yield (FR0091) stayed flattish at 6.86% on Thursday (12/15/22).
• Risk perception as indicated by 5-year CDS remained steady at 90-100 bps.
• The IDR weakened against USD to 15,619/USD yesterday vs 15,593/USD on the previous day.
• Indonesia's Nov-2022 trade balance surplus reached USD5.16 billion, a surplus that has continued for 31 consecutive months.
• The decrease in the trade balance surplus (vs USD 5.67 billion in Oct- 2022) was in line with the -2.5% MoM decline in exports due to falling volumes in RI's leading commodities (CPO and coal) and weakening oil and gas prices.
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 6.85-7.05% for today.
• Attractive Indo GB series to be traded today : FR0077, FR0037, FR0047, FR0052, FR0054, FR0096.
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