Global Market Update
• Upon resumption of US Treasury auctions, the yield on the benchmark of 10- year note slid 9 bps to 3.79% on Tuesday (01/03/23).
• The yield for short term rate (UST 2-year) stood at 4.40%. The spread between 2/10 UST note yield jumped to 61 bps.
• US equities contracted further upon Wall Street’s reopening. The DJI ticked down 0.03%; S&P 500 fell 0.40% and Nasdaq Composite dropped 0.76%
• The market downfall is accompanied by a further decay in the United States’ S&P Manufacturing PMI to 46.2 in Dec-22 (vs 47.7 in Nov-22), marking the largest factory activity decline in 2 years.
• China’s Caixin Manufacturing PMI also recorded a drop to 49 in Dec-22 (vs 49.4 in Nov-22) performing better than consensus of 48.8 as COVID impacts still lingers accompanied by declines in factory activity as well as purchasing activity.
Domestic Market Update
• The yield on the benchmark of 10-year Indo GB (FR0096) was closed at 7.06% on Tuesday (01/03/23).
• Risk perception as indicated by 5-year CDS was closed below 100 bps and slightly lowered to 97.30 bps. The IDR weakened and stood at IDR15,598/USD yesterday.
• The first Government Bond auction held this year (01/03/23) secured a total awarded amount of IDR19.2tn, with total incoming bids of IDR28.3 tn.
• The awarded amount was still below the indicative target and we believe this is due to investors’ overall cautious stance in readjusting their portfolio. The most sought after series was FR0096 (total bids of IDR9.5tn), being the new 10-year benchmark for this year.
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 7.00-7.20% for today.
• Attractive Indo GB series to be traded today : FR0070, FR0077, FR0044, FR0052, FR0054, FR0096.
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