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RESEARCH

Company Update

20 Juni 2022

Fixed Income Report June 20, 2022

Global Market Update
• Yields on benchmark 10-year UST note rose 3 bps to 3.23% on Friday (06/17/22).
• Yields jumped after US central bank raised FFR by 75 bps to 1.50-1.75% last week.
• FOMC reiterated that Fed’s commitment to curtail soaring inflation indicated a more hawkish stance ahead.
• Due to high inflation that hit nearly 41-years high, US CB also lowered FY22F economic growth forecast from 2.8% to 1.7%.
• US stock indices were mixed last week. DJI fell 0.13% while S&P 500 and Nasdaq Composite was up by 0.21% and 1.43% respectively.
• Swiss National Bank also surprised market by raising the benchmark policy rate for the first time in 15 years.
• Meanwhile BoE increased policy rate by 25 bps marking its fifth consecutive hike as markets already expected.

Domestic Market Update
• The benchmark 10-year Indo GB yield (FR0091) jumped 9 bps to 7.46% on Friday (06/17/22).
• The IDR weakened against USD and was closed at IDR14,825 last week vs IDR14,768 in the previous day.
• However, Indonesia’s risk premium 5-year CDS was down from 137.51 bps to 116.17 bps last week.
• This week markets will anticipate two days BI meeting. So far BI has not worried about inflation although it is rising yet remain stable within its target.
• Meanwhile IDR depreciation although continued, was driven more external sentiment rather than the weakening of its fundamental.

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 : FR0081, FR0084, FR0090, FR0047, FR0052, FR0054, FR0091.

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