Global Market Updates
• Yields on the US government bond rose despite annual inflation data showed that price increases slowing down.
• The benchmark for short-term 2-year yield jumped 9 bps to 4.67% and for the longer-term 10-year yield spiked 8 bps to 3.82% yesterday.
• US annual inflation rate came at 4.0% YoY in May-23, lower than previous month rate of 4.9% YoY and below consensus estimate of 4.1% YoY.
• The annual inflation rate data has spurred stock market to record a positive return. NDX led the gain after appreciating 0.83%.
• After inflation data release, markets bet for Fed to skip rate hike on the upcoming FOMC meeting this week.
• According to CME FedWatch tools there is 94.2% probability of Fed to hold FFR at current rate of 5.00-5.25% for Jun-23.
• Elsewhere, Chinese central bank PBoC decided to slash its 7-day repurchase rate by 10 bps from 2.0% to 1.9% given bleak economic outlook and bumpy road of post-pandemic recovery.
Domestic Market Updates
• The benchmark series of LCY government bond prices continued to strengthen on Tuesday (Jun 13, 2023).
• Indonesia’s benchmark 10-year LCY government bond yield FR0096 fell 4 bps to 6.26% and followed by other benchmark series for short and long term bond.
• Both, the IDR and 5-year CDS tended to be flattish on yesterday’s trading, further favoring yield to fall.
• Another positive catalyst for bond market came from SUN auction result. The total incoming bids hit IDR76.2tn, significantly higher than previous auction of IDR58.4tn.
• From the 7 series offered, the total awarded bids were IDR15tn or in-line to government’s indicative target.
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 6.20-6.40% for today.
• Attractive Indo GB series to be traded today : FR0070, FR0077, FR0084, FR0096.
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