Global Market Update
• Yield on the benchmark 10-year UST note fell 12 bps to 3.16% on Wednesday (06/23/22).
• UST note yields declined 12-16 bps along the curve yesterday as investors concern on US recession probability.
• US economy faces a threat from elevated inflation that could hinder growth and trigger stagflation.
• Fed’s chair Powell said that US CB commit to curb inflation by hiking interest rate as the policy that is recently available.
• In addition Powell also said that Fed does not intend to induce recession by raising interest rate.
• US major stock indices were closed lower. S&P 500 was 0.13% lower while DJI and Nasdaq Composite fell 0.15% respectively.
Domestic Market Update
• The benchmark 10-year Indo GB yield (FR0091) was closed 1 bps lower to 7.46% on Wednesday (06/22/22).
• The IDR weakened against USD and was closed at IDR14,863 yesterday vs IDR14,813 in the previous day.
• Indonesia’s risk premium 5-year CDS also rising and was closed at 107.57 bps yesterday from 104.44 bps in the previous day.
• Market also focus on BI’s meeting that will be held this week and majority expect domestic central bank to hold policy rate at 3.5%.
• The benchmark interest rate may be held back in line with the manageable inflation rate and BI's guidance. We estimate that BI will start to raise its benchmark interest rate in 2H22.
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 : FR0063, FR0081, FR0084, FR0090, FR0047, FR0052, FR0054, FR0091.
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