Global Market Update
• Most of yields on UST note declined along the curve as markets welcome companies earnings season.
• Yield on the benchmark 10-year UST note decreased about 6 bps to 3.46% on Tuesday (01/24/23).
• Meanwhile, at the same time, yield on the short-term 2-year UST note fell marginally 2 bps to 4.21%.
• Government bond yields in Advanced Economies mostly fell despite a hawkish statement from ECB policymakers.
• ECB is expected to raise 50 bps in Feb-23 and Mar-23, and some members are citing too early for ECB to slowdown the pace of rate hike.
• However, markets have already priced in a rate peak of 3.2% by Aug-23.
Domestic Market Update
• Yield on the benchmark 10-year (FR0096) moved flattish at 6.61% after Chinese New Year Holiday.
• The IDR strengthened against USD and was closed at IDR14,888/USD yesterday (vs IDR 15,075/USD last week).
• Domestic currency appreciation has sent USD rate to fall below IDR15,000/USD for the first time in 2023 and more than 3 months.
• On the other hand, the 5-year Indo CDS was flat and closed at 86.65 bps yesterday.
• Government has successfully issued SBSN amounting IDR14.15tn slightly above the indicative targe at IDR14tn.
• Investors appetite also improved reflected by higher incoming bids hitting IDR28.55tn in yesterday’s auction (vs IDR17.45tn on 10 January 2023).
• Government bond prices have risen on the back of disinflation expectation and BI’s signal to terminate rate hike cycle.
• On the data front, BI also reported the broad money supply grew 8.3% YoY in Dec-22 indicating that domestic liquidity to remain adequate.
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, FR0070, FR0077, FR0040, FR0047, FR0064, FR0085, FR0073, FR0054.
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