Global Market Updates
• US government bonds have been traded mixed yesterday with the short term rates tended to slightly decline whereas the longer ones were flattish.
• The short-term yield for 2-year benchmark fell 2 bps to 4.58% and the long-term benchmark for 10- year stayed at 3.74% on Monday (June 12, 2023).
• In response to government bond yields, US equity markets rallied with NDX came the strongest after appreciating 1.53% in a day.
• Markets await for US monetary policy decision this week. According to CME FedWatch data, there is 81.5% probability of Fed to hold rate at 5.00-5.25%.
• Furthermore, consensus also expect US annual inflation rate to continue to decline. The CPI in May- 23 is expected to increase by 4.1-4.3% YoY or lower than previous month pace of 4.9% YoY.
• Outside the US, investors will also closely follow the ECB and BoJ monetary policy meetings. ECB is expected to raise another 25 bps while BoJ to maintain its policy rate at current level.
Domestic Market Updates
• The benchmark series of LCY government bond prices tended to strengthened in the beginning of this week.
• Indonesia’s benchmark 10-year LCY government bond yield FR0096 fell 2 bps to 6.30% on Monday (Jun 12, 2023).
• This was also followed by other benchmark series that recoded price appreciation and yield decline, despite a slight decline in IDR against USD.
• Overall domestic government bond market is seen to be robust with the yield movement tended to skew on the bullish side.
• Sovereign credit risk indicator proxied by 5-year CDS also continuously improving and now hovering around 85 bps by which a month ago stood at above 90 bps.
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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