Global Market Update
• Yields on UST note rose 2-13 bps along the curve on Wednesday (06/01/22).
• The benchmark 10-year UST note yield increased 6 bps to 2.91% at the same time.
• Eurozone government bond yields also increased as inflation remains a key concern for market. Eurozone inflation hit 8.1% increase in May-22.
• Some Fed’s officials think that it is too early to think that inflation has reached its peaks.
• US central bank is also ready to tighten further its monetary policy combining balance sheet shrinking and interest rate hikes.
• Market participants are now pricing +50 bps increase in June, July and September meeting.
Domestic Market Update
• The benchmark 10-year Indo GB yield (FR0091) increased 2 bps to 7.03% on Tuesday (05/31/22).
• The IDR strengthened against USD to IDR 14,534/USD on Tuesday from IDR14,557/USD in the previous day.
• Indonesia risk premium 5-year CDS started to increase and was closed at 91.24 bps on Tuesday.
• Government has conducted sharia securities auction on Tuesday and the total incoming bids amounted to IDR20.2tn while the awarded bids amounted to IDR8tn or IDR1tn lower than indicative target.
Market Projection
• Indonesia's CPI is expected to rise +0.41% MoM/+3.56% YoY in May-22. On a monthly basis the pace of inflation is slowing from +0.95% MoM in Apr-22.
• Given the recent development on global and domestic market, we expect the 10 year Indo GB yield to move within a range of 6.90-7.10% for today.
• Attractive Indo GB series to be traded today : FR0070, FR0077, FR0044, FR0064, FR0078, FR0054, FR0091, FR0068, FR0072.
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