Company Update

30 Januari 2023

Fixed Income Report January 30, 2023

Global Market Update
• Yields on UST note slightly increased along the curve ahead of FOMC meeting.
• The benchmark 2-year and 10-year UST note yield increased 2 bps to 3.51% and 4.20% respectively on the last trading day of the previous week.
• A marginal increase in government bond yield remained favorable for equity market to continue its rally.
• The US stock market recorded gain last week. All the benchmark indices rose more than 1%, yet Nasdaq Composite lead with 2.26% gain.
• Market move came ahead FOMC meeting. Market participants expect US central bank to slowdown the pace of interest rate hike going forward.
• According to CME FedWatch, there is 98.4% probability of Fed to raise 25 bps in Feb-23 bringing the rate to 4.75%.

Domestic Market Update
• Yield on the benchmark 10-year (FR0096) increased 6 bps 6.72% on Friday (01/27/23).
• After rallied earlier this year, government bond prices seemed to start reverting its trend.
• The IDR weakened against USD and was closed at IDR14,986/USD after previously closed at IDR14,948/USD.
• Indonesia’s 5-year CDS was consistently below 90 bps recently and closed at 84.20 bps.
• In spite of rising yield on the benchmark series, Bank Indonesia reported that foreign inflows to SBN market hitting IDR3.63tn during the period of 24-26 January 2023.
• Furthermore, Bank Indonesia also expects Jan-23 annual inflation rate could come at 5.33% which indicate a lower pace than the previous month figure of 5.51% YoY.

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 6.65-6.85% for today.
• Attractive Indo GB series to be traded today : FR0063, FR0070, FR0077, FR0081, FR0040, FR0047, FR0078, FR0096, FR0045, FR0050.

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