Global Market Update
• The benchmark UST note yields continued to decline. The 10-year UST note yield fell 3 bps to 3.53% on Monday (01/09/22).
• Meanwhile at the same time, yield on the short term rates proxied by the 2-year UST note also dropped 4 bps to 4.21%.
• Despite, having a lower yield across UST note maturities, US stock market closed vary yesterday. The DJI and S&P 500 each fell 0.34% and 0.08%, whilst Nasdaq Composite jumped 0.63%.
• Market participants are now assessing inflation outlook that is expected to cooling down. The global disinflation on the back of tight monetary policy as well as sluggish external demand are overshadowing the economy.
• Given the possibility of inflation to cool down driven by lower growth in aggregate demand, the interest rate is likely to peak in the near future and market participants start to price in the event.
Domestic Market Update
• Yield on the benchmark 10-year Indo GB (FR0096) continued to fall. Yield dropped 7 bps to 6.89% on Monday (01/09/22).
• The decline in yield was also supported by IDR appreciation and improving risk perception. The IDR strengthened against USD and closed at IDR15,568/USD yesterday (vs IDR15,633/USD) last week.
• On the other hand, the 5-year Indo CDS declined to 91.15 bps yesterday (vs 96.52 bps last week). The recent trend showed the 5-year Indo CDS was consistently below 100 bps.
• We think lower yields, strengthening IDR and improving risk perceptions particularly in the bond market should favor government agenda to issue SBSN today with the indicative target set at IDR14tn.
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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