Company Update

15 Juni 2022

Fixed Income Report June 15, 2022

Global Market Update
• The UST yields climbed up 3-26 bps along the curve on Tuesday (06/14/22) as markets bet more aggressive monetary tightening by the Fed.
• The benchmark 10-year UST note yield rose 9 bps to 3.48% yesterday hitting a decade high.
• However, spread between 2 and 10 year UST note yield stood at 5 bps from 1 bps previously.
• US central bank conducts a FOMC meeting on 14-15 June and market expects the committee will raise FFR by 75 bps this time.
• US equity indices were mixed, only Nasdaq Composite that posted an increase of 0.18% while DJI and S&P fell 0.5% and 0.38% respectively.
• Eurozone government bond yields also spiked to a multiyear highs. Germany’s 10- year government bond yield rose 12 bps to 1.75%, while UK’s benchmark government bond yield rose 5 bps to 2.58% yesterday.

Domestic Market Update
• The benchmark 10-year Indo GB yield (FR0091) increase 6 bps to 7.40% on Tuesday (06/14/22).
• The IDR weakened against USD and was closed at IDR14,699 yesterday (vs IDR14,682) in the previous day.
• Indonesia risk premium 5-year CDS was closed at 109.92 bps from previously at 110.02 bps.
• Government has conducted sharia securities auction and issued IDR5.1tn SBSN yesterday.
• The total incoming bids were IDR15.1tn, lower than the previous auction which recorded IDR20.2tn.
• Lower incoming bids may indicate that investors keep wait and see amidst rising UST yields as we have expected.
• The total awarded value in yesterdays auction was lower than the indicative target set by the government at IDR9tn.

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 7.30-7.50% for today.
• Attractive Indo GB series to be traded today : FR0070, FR0077, FR0084, FR0090, FR0078, FR0085, FR0054, FR0091.

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