Global Market Update
• Yield on shorter and longer term UST note remains inverted. The benchmark 10-year UST note yield was up by +3bps to 3.02% on Tuesday (07/19/22).
• Meanwhile, yield on 2-year UST note rose higher with the increase of +6 bps to 3.24%.
• Spread between 2-year and 10-year now stood at -22 bps as investors anticipate another 75-100 bps FFR hikes.
• US stock indices rebounded sharply with DJI and S&P 500 rose +2.43% and +2.76% respectively.
• Meanwhile the tech-heavy Nasdaq Composite jumped +3.11% and lead all the gain.
• UK and Germany benchmark government bond increased by +3 bps and +6 bps yesterday.
Domestic Market Update
• The benchmark 10-year Indo GB yield (FR0091) rose 7 bps to 7.44% on Tuesday (07/19/22).
• The IDR slightly strengthened to IDR14,977/USD yesterday and improving from IDR14,981/USD in the previous day.
• Indonesia’s risk premium 5-year CDS fell to 155.74 from 157.25 bps
• Government has issued IDR11.87tn of SUN on yesterday’s auction. The total nominal awarded was below indicative target set at IDR15tn, despite higher incoming bids that amounted to IDR29.4tn.
• On the data front, BI Banking Survey inj 2Q22, credit is expected to grow +9.2% FY22F, better than +5.1% YoY FY21.
• Positive views on FY22F loan growth are supported by : 1) strengthening economic condition as well as 2) ample liquidity in the banking system.
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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