Global Market Update
• UST note yield curve climbed 3-5 bps higher on Wednesday (06/08/22). Yield on benchmark 10-year UST note rose 4 bps to 3.02%.
• Eurozone government bond yields also increase as ECB plans to unveil their tightening plan.
• Benchmark 10-year Germany and UK government bond yields increased 6 bps and 3 bps respectively yesterday.
• ECB is expected to raise benchmark policy rate starting in July-22 and is seen to end negative interest rate regime.
• Tightened monetary policy as a consequence of elevated inflation remains the key investor focus nowadays.
• The Reserve Bank of India (RBI) raised key interest rate by 50 bps on Wednesday as widely expected.
• RBI also raised its inflation forecast for FY22F to increase 6.7% from 5.7% earlier.
• All the 3 major US stock indexes were closed lower. DJI fell 0.81%; S&P 500 dropped 1.08% and Nasdaq Composite lost 0.73%.
Domestic Market Update
• The benchmark 10-year Indo GB yield (FR0091) rose 15 bps to 7.15% on Wednesday (06/08/22).
• The IDR weakened against USD and was closed at IDR14,492 yesterday (vs IDR14,454) previously.
• Indonesia risk premium 5-year CDS was closed at 90.99 bps and remained below 100 bps this month.
• Indonesia FX reserves fell USD100mn to USD135.6bn in May-22. The FX reserves position was influenced among others by : oil and gas foreign exchange receipts, taxes and the need for external debt payments
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 7.05-7.25% for today.
• Attractive Indo GB series to be traded today : FR0070, FR0077, FR0084, FR0090, FR0078, FR0085, FR0054, FR0091.
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