Global Market Update
• The benchmark 10-year UST note yield saw another 12 bps hike to 3.69% on Tuesday (12/20/22).
• The benchmark for short term rate of 2-year maturity remained at 4.25%.
• Yield curve inversion narrowed and the spread of 2/10 year benchmark stood at -56 bps (vs -68 bps the previous day).
• US equities indices took a slight rebound yesterday. The DJI rose 0.28%; S&P 500 edged up 0.11% and Nasdaq Composite saw a 0.01% uptick.
• The US recorded a 11.2% MoM fall in building permits to an annual rate of USD1.34 million (vs USD1.51 million in Oct-22), hitting the lowest level in more than 2 years, confirming the persisting downfall of US housing market as surging mortgage rates strikes demand and activity.
• Bank of Japan was reported to hold its previous policy interest rate at -0.1% with views of imminent economic recovery as supply side has been seen to regain momentum coupled with subsiding COVID effects, while expanding bond yield fluctuations from +/-0.25% to +/-0.5%.
Domestic Market Update
• The benchmark 10-year Indo GB yield (FR0091) stood at 6.87% on Tuesday (12/20/22).
• Indonesia’s 5-year CDS stood at 104.64 bps yesterday (vs 102.19 the previous week).
•The IDR slightly weakened against the USD and was closed at IDR15,603/USD on Tuesday (vs IDR15,598/USD the previous day).
• Ministry of Finance recorded a state budget deficit of IDR 237 trillion (1.2% of GDP) as of 14 December, far below the projection of IDR840 trillion (4.5% of GDP).
• The sublime performance was propped up by state’s income 36.9% YoY growth of IDR1,812 trillion, with tax revenue growing 41.9% YoY, while income from duties rose 20% YoY.
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 6.80-7.00% for today.
• Attractive Indo GB series to be traded today : FR0070, FR0077, FR0081, FR0095, FR0052, FR0073, FR0054, FR0091, FR0096.
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