Global Market Updates
• Upon Wednesday’s reopening (Jul 5, 2023), Wall Street concurrently edged down; DJI by -0.38%, S&P 500 by -0.2% and Nasdaq by -0.18%.
• Stocks were under pressure after the Fed’s FOMC minutes gave off strong hawkish tones, which showed a united agreement for pausing in June’s meeting but with high expectations of more rate hikes afterward as they cited incessant tight labour markets and inflation rates.
• With the buoying hawkish sentiment, the long-term 10-year US Treasury note slipped further as its yield rocketed by 9 bps, while the shorter-termed 2-year note’s yield remain unchanged at 4.94%. This puts the US yield curve spread at -0.99 bps.
• The CME Fedwatch consensus raised their expectations of a rate hike in July’s FOMC meeting to 88.7% (from the previous day’s 86.2%), with further hikes also expected in Sep-2023 (90.9%) and Nov-2023 (93.4%).
• We also observed global stocks to concurrently slip in tandem with their rising yield; German’s 10-year bund rose +2.5 bps, UK’s Gilt rose 7.9 bps and Japan’s 10-year bond followed suit by +0.6 bps.
Domestic Market Updates
• The longer-termed benchmark series of LCY government bonds continued its appreciation spree yesterday (Jul 5, 2023), whilst the shorter-termed 5-year series (FR0095) depreciated.
• Indonesia’s benchmark 10-year LCY government bond yield FR0096 fell by another 3 bps to 6.16%, whereas the longer-termed 15-year yield (FR0098) edged down 1 bps and the 20-year yield (FR0097) went down another 3 bps.
• The market seems to be pricing in on IMF’s testimony on Indonesia’s economic resiliency amid faltering western economies, though still faced with a downside risk of China’s economic scramble.
• IDR weakened against most major currencies yesterday. It depreciated against the USD as the USD/IDR rate rose by +0.15%.
Market Forecast
• Given the recent developments that unfolded within the global and domestic markets, we expect the 10 year Indo GB yield to move within the range of 6.10-6.30% for today.
• Attractive Indo GB series to be traded today : FR0056, FR0077, FR0084, FR0087, FR0096.
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