Global Market Update
• Yields on the benchmark UST note increased along the curve on Tuesday (02/21/23).
• The benchmark 10-year yield increased 14 bps to 3.96%, while the shorter benchmark of 2-year yield was 11 bps higher and closed at 4.73% at the same time.
• US government bond yields finally hitting the highest level since Nov-22 as markets continue to assess Fed’s hike probability.
• US stock indices fell deeply yesterday. The DJI fell 2.50%, whereas S&P 500 and Nasdaq Composite dropped 2.06% and 2.00% respectively.
• US stock indices have fallen on the back of a significant spike on government bond yield
• What dictates US financial assets price remain driven by monetary policy expectation.
• Based on CME FedWatch, there is 79% probability of Fed will raise another 25 bps in Mar-23.
• Some even expect Fed to continue tighten with higher peak rate around 6% by Sep-23.
Domestic Market Update
• Yield on the benchmark 10-year (FR0096) increased 3 bps to 6.73% on Tuesday (02/21/23).
• The IDR weakened against USD and was closed at IDR15,190/USD after previously closed at IDR15,159/USD.
• Indonesia’s 5-year CDS finally gradually increasing and now is near to hit 100 bps again. Indonesia’s 5-year CDS stood at 98.57 bps.
• SBSN auction results : government has issued IDR12tn of SBSN, slightly below indicative target of IDR14tn despite higher incoming bids.
• The total incoming bids on yesterday’s auction hit IDR30.5tn marking a higher bids value than previous auction which recorded IDR26.3tn bids.
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 6.75-6.95% for today.
• Attractive Indo GB series to be traded today : FR0063, FR0046, FR0070, FR0077, FR0081, FR0096.
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