Global Market Updates
• Fed’s decision to hold rate in Jun-23 FOMC meeting has sparked equity markets to rally. However risk on further tightening remains on the table.
• The benchmark US stock indices jumped more than 1% in a day led by the DJI that gained 1.26% as yields on US government bond declined last night.
• Yield on the short-term US Treasury for 2-year benchmark fell 4 bps, whereas the long-term 10-year benchmark dropped even deeper by 7 bps to 3.72%.
• Despite Fed maintained FFR at 5.00-5.25% however the dot plot showed that rate may go up to 5.6% by the end of the year.
• FOMC’s dot plot has sent market participants betting on another 25 bps hike for the upcoming FOMC meeting after Jun-23 pause.
• Unlike Fed, ECB raised 25 bps its main refinancing rate to 4.0% pointing the highest level since 2008 GFC and rate on deposit facility to hit its 22-year high at 3.5%.
• In contrast to Euro Zone, PBoC slashed its one-year medium-term lending facility by 10 bps to 2.6%% after previously cutting 10 bps on its reveres repo rate to support the economy.
Domestic Market Updates
• The benchmark series of LCY government bond prices fell on Thursday (Jun 15, 2023). Indonesia’s benchmark 10-year LCY government bond yield FR0096 rose 4 bps to 6.28% and followed by other benchmark series for short and long term bond.
• Domestic LCY government bond yield decline was also accompanied by IDR depreciation against major currencies particularly USD by which the local currency weakened 0.32% yesterday.
• Statistics Indonesia reported lower than expected trade balance for May-23. Last months trade surplus was USD0.44bn or significantly lower than consensus estimate of USD3.02bn surplus.
• The decline in trade surplus was attributable to flattish annual exports growth while imports rose higher.
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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