Company Update

04 Juli 2022

Fixed Income Report July 4, 2022

Global Market Update
• UST note yields posted a decline of 1-14 bps along the curve on Friday (07/01/22).
• On a weekly basis, yields on US government bond has dropped 4-30 bps along the curve.
• The benchmark 10-year UST note yield fell 14 bps to 2.88% last week, nearly hitting the lowest level since May-22.
• Yields drop came after US ISM Manufacturing PMI recorded a decline of 3.1 points to 53 in Jun-22, below consensus estimate of 55.
• Fear on recession due to high inflation has brought UST note yield to fall indicating investors are shifting towards safe haven asset.
• Albeit closed with gain last week, US stock index S&P 500 was closed out its worst 1H since 1970 with losses of 20.6%.
Domestic Market Update
• The benchmark 10-year Indo GB yield (FR0091) rose 5 bps to 7.25% on Friday (07/01/22).
• The IDR weakened against USD and was closed at IDR14,943 last week vs IDR14,903 on the previous day.
• Indonesia’s risk premium 5-year CDS was closed still above 140 bps last week.
• Statistics Indonesia reported domestic inflation rate hit 4.35% YoY, marking the highest pace since Jun-17.
• The increase in annual inflation rate was driven by volatile and administered price.
• Annual inflation rate in Jun-22 was above consensus & our estimate at 4.18%YoY/4.24% 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 7.25-7.45% for today.
• Attractive Indo GB series to be traded today : FR0063, FR0081, FR0084, FR0090, FR0047, FR0052, FR0054, FR0091.
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