Company Update

14 Juli 2022

Fixed Income Report July 14, 2022

Global Market Update
• The benchmark 10-year UST note yield fell 4 bps to 2.93% on Wednesday (07/13/22).
• Meanwhile the benchmark for shorter rate 2-year UST note yield jumped 10 bps to 3.15%
• US short rates (<5 years) spiked while longer rates declined causing the yield curve inversion.
• The spread between 2-10 year UST note yield widened in negative territory to - 22 bps reaching the biggest level since 2000.
• Spread between short and long maturity UST note widened in negative territory after US reported an increase of annual CPI by 9.1% in Jun-22.
• The actual inflation rate was higher than market estimate as well as previous month figure of 8.8% YoY/8.6% YoY and marking the fastest pace since Nov- 81.
• Given the yield curve inversion, market participants now expect that Fed would likely to increase FFR by 100 bps on Jul-22 meeting.
• US stock market tumbled. DJI fell 0.67% while S&P 500 and Nasdaq Composite was down 0.45% and 0.15% respectively.
Domestic Market Update
• The benchmark 10-year Indo GB yield (FR0091) fell 4 bps to 7.22% on Wednesday (07/13/22).
• The IDR was closed at IDR14,988/USD in the spot market and keeping the level near IDR15,000/USD.
• Indonesia’s risk premium 5-year CDS increased to 156.97 bps yesterday. Indonesia’s risk premium was still above 150 bps.
• JCI fell 1.15% to 6,641 and recorded outflows of >IDR850bn yesterday. Fed’s aggressive tightening would cause outflows and potentially depreciating IDR further.
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 7.20-7.40% for today.
• Attractive Indo GB series to be traded today : FR0063, FR0070, FR0077, FR0056, FR0078, FR0052, FR0073, FR0091.
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