Global Market Update
• Global markets were mostly closed on Monday (12/26/22) commemorating a Christmas holiday.
• Surprisingly BoJ decided to widen its target range for 10-year JGB , by tweaking its yield curve control (YCC) and allowing it to move 50 bps either side of 0% target.
• This policy action was higher than previously set at 25 bps, and BoJ said this to improve market functioning and encourage a smoother entire yield curve, while maintaining accommodative financial condition.
• As a consequence, yield on its benchmark 10-year JGB rose significantly from 0.25% last week to 0.43% recently.
Domestic Market Update
• The benchmark 10-year Indo GB yield (FR0091) stayed at 6.90% on Monday (12/26/22).
• Risk perception as indicated by 5-year CDS remained steady at 90-100 bps.
• The IDR weakened against USD to 15,633/USD on Monday vs 15,593/USD on the previous day.
• According to Bank Indonesia, foreign investors booked a net inflows of IDR1.45tn in government bond market, and thus supporting the fixed income asset pricing.
• In addition, BI also reported that broad money supply (M2) increased 9.5% YoY in Nov-22, indicating that domestic liquidity remains aplenty.
• We believe lack of sentiment will not affect government bond yield significantly as holiday season take a place.
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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