Global Market Update
• Yields on the benchmark UST note moved upward along the curve after Jan-23 inflation data release.
• The benchmark 10-year UST note yield rose 5 bps and closed at 3.75% on Tuesday (02/14/23).
• US stock responded mixed following the increase in UST note yield. The DJI and S&P 500 fell 0.46% and 0.03% respectively.
• On the other hand, Nasdaq Composite as the proxy for US tech-stock lead the gain with 0.57% appreciation.
• US annual inflation rate increased 6.4% YoY in Jan-23, slightly lower than previous month pace at6.5%YoY, but higher than consensus estimate at 6.2% YoY.
• US annual inflation rate in Jan-23 marked the lowest reading since Oct-21.
• Market participants remain focus on Fed’s future monetary policy as some expect US central bank will go further to raise the policyrate to 6.0% by Sep-23.
Domestic Market Update
• Yield on the benchmark 10-year (FR0096) fell slightly by 2 bps to 6.70% on Tuesday (02/14/23).
• The benchmark government bond yield slight decline following IDR appreciation and im proving risk perception.
• The IDR strengthened against USD and closed at IDR15,167/USD yesterday vs IDR15,205/USD on the previous day.
• Indonesia’s 5-year CDS inched 1.53 bps lower and closed at 91.10 bps yesterday.
• Government has issued 7 series of SUN amounting at IDR20tn on yesterday’s auction. The amount of issuance was lower than indicative target at IDR24tn.
• In addition, the total incoming bids in yesterday’s auction were only IDR56tn, lower than previous auction which hit IDR67tn.
• We see that investors tend to be wait and see in response to the possibility of higher than expected peak rate in US policy rates.
• Furthermore, market participants will also look at trade balance data today. Consensus expect a trade surplus of USD3.35bn in Jan-23.
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 6.71-7.00% for today.
• Attractive Indo GB series to be traded today : FR0063, FR0046, FR0070, FR0077, FR0081, FR0052, FR0096, FR006.
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