Company Update

27 Juli 2022

Fixed Income Report July 27, 2022

Global Market Update
• IMF cut global growth prospect by 40 bps from Apr-22 forecast to 3.2% for FY22E.
• At the same time IMF also revised up world CPI by 90 bps to 8.3% for FY22E.
• The slump in growth coupled with elevated inflation has warned us on 1970’s stagflation.
• Yields on the benchmark 10-year UST note was steady and closed at 2.81% on Tuesday (07/26/22).
• Spread between 2/10-year UST note remained in negative territory indicating an inversion.
• Along with yield curve inversion, US recession probability rose from 15% in Mar-22 to 40% in Jul-22.
• Key market focus remain on FOMC meeting 26-27 Jul 2022 as well as corporate earning release.
• US stock market fell on Tuesday. DJI was down by 0.71%; S&P 500 fell 1.15% while Nasdaq Composite lost 1.87%.

Domestic Market Update
• The benchmark 10-year Indo GB yield (FR0091) rose 4 bps to 7.41% on Tuesday (07/26/22).
• The IDR was flat and closed at IDR14,993/USD yesterday.
• On the other hand, Indonesia’s risk premium 5-year CDS increased to 117,47 bps (vs 116.18 bps on the previous day).
• Government issued IDR5.87tn worth of sharia securities (SBSN) from IDR7tn indicative target through auction on Tuesday (07/26/22).
• Lower than targeted issuance was also influence by lower incoming bids value (IDR10.77tn yesterday vs IDR12.75tn previous auction) as investors tend to wait and see ahead of FOMC policy meeting.

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 7.30-7.50% for today.
• Attractive Indo GB series to be traded today : FR0063, FR0070, FR0077, FR0056, FR0078, FR0052, FR0073, FR0091.

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