Company Update

06 Juni 2023

Fixed Income Report June 6, 2023

Global Market Updates

• The US equity market fell after jumping significantly starting this week despite most of benchmark government bond yield slightly declined.

• All the 3 benchmark indices for equity reversing previous day performance with the DJI underperforming its peers after dropping 0.59%.

• Meanwhile at the same time US Treasury yield recorded a slight decrease with the benchmark 2-year dropping 3 bps to 4.47% and the benchmark 10-year slipped 1 bps to 3.69% yesterday.

• Upon the approval of debt ceiling now markets await for the upcoming US monetary policy by which market expect Fed to hold its policy rates unchanged at 5.00-5.25% with 76% probability.

• Furthermore, US services sector also experience a deceleration as it is reflected on its Services PMI which fell to 50.3 in May-23 (vs 51.9 in Apr-23).

• Despite still expansive, yet the service sector PMI reading pointing to the slowest growth in the last 5 months period.


Domestic Market Updates

• Indonesia’s LCY government bond market tended to weaken starting this week with the benchmark for 10-year (FR0096) yield increased marginally by 1 bps to 6.37%.

• The IDR has appreciated against the greenback and closed at IDR14,891/USD from IDR14,994/USD last week or appreciating 0.69%.

• Risk perception keeps on improving as the 5-year CDS is now approaching to 85 bps level.

• Statistics Indonesia reported a slower inflation as CPI increased 0.09% MoM in May-23 or lower than previous month pace of 0.33% in Apr-23.

• Annually, Indonesia’s headline CPI increased by 4.00% marking the slowest pace since the beginning of this year partly due to post Lebaran festive momentum on the back of transportation tariff normalization.

• Given the stable financial condition and the IDR along with inflation decelerating to a desire level, we expect BI to maintain its policy rate steady.


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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