Global Market Update
• Yields on the benchmark UST note increased along the curve on Thursday (02/16/23).
• The benchmark 10-year yield increased 5 bps to 3.86%, while the shorter benchmark of 2-year yield was 2 bps higher and closed at 4.65% at the same time.
• US stock indices fell deeply yesterday. The DJI fell 1.26%, whereas S&P 500 and Nasdaq Composite dropped 1.38% and 1.78% respectively.
• US tech stocks has fallen after recording a gain on the previous day as yields on government bond continue to rise.
• The increase in government bond yields and stock market fall followed US PPI data release which came above expectation.
• US PPI rose 0.7% MoM in Jan-23, above consensus estimate which expect 0.4% increase.
• Furthermore, US initial jobless claims through 11 February 2023 was 194,000 or slightly lower than previous figure yet 6,000 lower than market forecast.
• Strong job market and still increasing inflation may hint and further justify Fed to continue hiking its reference rate and bringing the peak rate higher than anticipated.
Domestic Market Update
• Yield on the benchmark 10-year (FR0096) fell 6 bps to 6.68% on Thursday (02/16/23).
• The IDR strengthened against USD and was closed at IDR15,159/USD after previously closed at IDR15,206/USD.
• Indonesia’s 5-year CDS finally fall again below 90 bps and closed at 89.22 bps yesterday.
• Bank Indonesia (BI) decided to hold 7-day reverse repo rate at 5.75% and signaling no need to further hike as 225 bps cumulative hike is sufficient to bring inflation at a desirable level.
• In response to possibility of Fed to increase rates more than expected, BI has pledged to strengthen IDR stabilization agenda.
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 6.60-6.80% for today.
• Attractive Indo GB series to be traded today : FR0063, FR0046, FR0070, FR0077, FR0081, FR0096.
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