Company Update

05 Juni 2023

Fixed Income Report June 5, 2023

Global Market Updates
• Yields on the US treasury were traded up last week with 2-year benchmark jumped 16 bps to 4.50% and the benchmark 10-year increased 10 bps to 3.70% on Friday (Jun 5, 2023).
• However, despite rising government bond yield, US stock indices recorded a substantial appreciation.
• Unlike the previous trend, the DJI led the gain after increasing 2.12% whereas NDX turned out the laggard, but still rising 1.07%.
• The US Labor Department reported that non-farm payrolls increased by 339k in May-23 and exceeding both consensus estimate and previous month of 190k and 253k respectively.
• Furthermore, the agreement of US debt ceiling for two years just before the deadline of June 5 also provide a relief.
• Yet, albeit higher than expected US non-farm payrolls, markets expect Fed would hold interest rate unchanged in the upcoming FOMC meeting.
• According to CME FedWatch tools, there is 74.1% probability of FFR to stay at a current level of 5.00- 5.25%.

Domestic Market Updates
• All the benchmark LCY government bond prices were up just before the long holiday with the 10- year benchmark falling 2 bps on a daily basis to 6.36%.
• Yields on the government bond remained stable albeit the IDR is approaching to 15,000/USD level, partly offset by improving risk sentiment as 5-year CDS keeps improving.
• Net foreign selling in the government bond market was also manageable as BI reported an outflows of IDR2.2tn on May 29-30.
• Furthermore, Indonesia’s manufacturing PMI showed to be resilient and still expansive at 50.3 in May-23 despite lower than previous month of 52.7.
• Markets now await for May-23 inflation data that we expect to continue decelerating with the pace of 0.29% MoM/4.21% YoY.

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 6.30-6.45% for today.
• Attractive Indo GB series to be traded today : FR0081, FR0090, FR0087, FR0088, FR0062.

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