Global Market Updates
• US government bond yields have risen in the past week as markets await for Fed’s upcoming FOMC meeting.
• Despite a mixed signal sent by Fed’s officials, markets are expecting a rate pause for Jun-23 with the target rate at 5.00-5.25% as probability to hold hit 73% recently.
• However the short-term government bond yield for 2-year benchmark has risen by 10 bps from a week a go and reaching 4.60% on the last trading day of last week.
• At the same time, the longer-term benchmark for 10-year yield remained elevated yet with a more marginal increase. The long-term yield rose 4 bps in a week and closed at 3.74%.
• US equity market as proxied by S&P 500 is said to have entered bullish phase since it was up >20% from the Oct-22 low.
• Interestingly, US stock indices also recorded a positive return last week led by DJI that appreciated nearly 1%.
• Outside the US, investors will also closely follow the ECB and BoJ monetary policy meetings.
Domestic Market Updates
• The benchmark series of LCY government bond prices tended to strengthened in the last trading day of the previous week.
• Indonesia’s benchmark 10-year LCY government bond yield FR0096 dropped 2 bps to 6.32% on Friday (Jun 9, 2023). This was also followed by other benchmark series.
• Yield on the long-term government bond was also supported by IDR appreciation against the greenback as well as improving risk perception.
• According to Bank Indonesia’s report, government bond market has benefitted from the foreign inflows amounting at IDR4.79tn during 5-8 June 2023.
• Today, Bank Indonesia will also release consumer confidence index for May-23 period by which is expected to remain strong.
Market Forecast
• Given the recent development on global and domestic market, we expect the 10 year Indo GB yield to move within a range of 6.30-6.45% for today.
• Attractive Indo GB series to be traded today : FR0070, FR0077, FR0084, FR0096.
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