Global Market Updates
• Yields on the benchmark US government bond climbed up on Friday last week. The short-term benchmark for 2-year yield jumped 7 bps and closed at 4.72%.
• Furthermore, the yield of long-term benchmark for 10-year maturity was also 5 bps higher than previous day and closed at 3.77%.
• Rising government bond yields across the curve has triggered equity market correction. NDX fell 0.68% and becoming the worst performing index.
• However, US stock market performance remained yielding a weekly positive return with NDX led the appreciation gaining more than 3% last week.
• Markets continue to assess the probability of another rate hike for Jul-23 FOMC meeting. CME FedWatch showed there is 71.9% probability of 25 bps hike for the upcoming meeting.
• Markets will also pay attention on China’s monetary policy for Jun-23. Some expect PBoC to further ease its Loan Prime Rate for 1&5 year by 10 bps respectively after cutting 10 bps on its reverse repo last week.
• Bleak outlook for the second largest economy in the world has pushed its central bank to provide a stimulus.
Domestic Market Updates
• The benchmark series of LCY government bond prices stabilized on Friday (Jun 16, 2023). Indonesia’s benchmark 10-year LCY government bond yield FR0096 stayed at 6.28%.
• Indonesia’s government bond market recorded a positive performance over the past week as most of benchmark government bond yields tended to decline.
• The positive performance of government bond market was in contrast to equity by which JCI recorded a flat performance last week.
• Bank Indonesia (BI) reported, domestic financial markets were pressured by foreign selling. During 12-15 June, government bond market posted an outflows of IDR0.64tn, whereas equity net foreign selling was higher at IDR1.74tn at the same time.
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 : FR0077, FR0084, FR0064, FR0096.
MNCS Research
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