Global Market Update
• Yields on the benchmark UST note increased in the last trading day of previous week.
• The benchmark 10-year yield rose 5 bps to 3.94% on Friday (02/24/23). The benchmark long-term rate has increased 13 bps on a weekly basis.
• US major stock indices tumbled as yields on government bond rising. The DJI fell 1.02%; S&P 500 dropped 1.05% while Nasdaq Composite declined 1.69%.
• Rising government bond yield was attributable to higher than expected US inflation data in Jan-23.
• US core PCE price index as the Fed’s preferred inflation gauge increased 0.6% MoM, higher than consensus estimate of 0.4% MoM.
• The annual pace of PCE price increase was 4.7% YoY, indeed higher than consensus estimate.
• The data release showed the possibility of further Fed’s hike and higher than previously expected peak and terminal rate.
Domestic Market Update
• Yield on the benchmark 10-year (FR0096) slightly increased 1 bps to 6.78% on Friday (02/24/23).
• The IDR weakened against USD and was closed at IDR15,225/USD after previously closed at IDR15,192/USD.
• Indonesia’s 5-year CDS stayed below 100 bps and closed at 95.56 bps last week.
• Bank Indonesia (BI) reported foreign investors net sold in the SBN market amounting at IDR0.86tn during 20-23 February 2023.
• Furthermore, BI also reported the broad money supply (M2) grew 8.2% YoY in Jan-23.
• Loan expanded 10.2% YoY in Jan-23 after growing 11.0% YoY in the previous month.
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 6.70-6.90% for today.
• Attractive Indo GB series to be traded today : FR0046, FR0070, FR0077, FR0044, FR0081, FR0086, FR0096, FR0098.
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