Global Market Update
• Wall Street ended 2022 with the worst performance since 2008 GFC. The Dow Jones was down 9.4%; S&P 500 fell 19.95% and Nasdaq Composite came at worst with 33.89% decline.
• The worst performance in stock market was coupled with fear of US economy to fall into stagflation. Risk of recession probability showed up as yield curve inverted.
• Yield on the benchmark 10-year UST note was closed at 3.82% on the last trading day of 2022.
• Meanwhile at the same time, yield on the short-term rate indicated by 2-year UST note was closed at 4.37%.
• Spread between 2/10-year UST note yield stood at -55 bps on the last trading day of 2022.
Domestic Market Update
• The yield on the benchmark of 10-year Indo GB was closed at 6.92% on Friday (12/30/22).
• Risk perception as indicated by 5-year CDS was closed below 100 bps and stood at 99.57 bps.
• The IDR weakened against USD and was closed at IDR15,658/USD, slightly in-line with our year-end projection of IDR15,650/USD.
• Based on transaction data on December 26-29 2022, non-residents on the domestic financial market recorded a net sell of IDR3.51 trillion, consisting of IDR0.88 trillion net selling on the SBN market and IDR2.63 trillion net selling on the stock market.
• The net foreign sell off in domestic financial market ahead the year end festive momentum may reflect investors tendency to cash out ahead of holiday season that maybe temporary.
• On the data front, Indonesia’s manufacturing PMI increased 0.6 point (MoM) to 50.9 in Dec-22 pointing to the 16th straight month of expansion.
• Market will also look at inflation data release today that we expect to increase 0.50% MoM or with an annual rate of 5.34% YoY factoring year end seasonality.
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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