Global Market Updates
• Yields on US government bond fell along the curve yesterday. The short-term benchmark for 2-year fell 2 bps to 4.52%, while the longer benchmark for 10-year dropped 8 bps to 3.72% yesterday.
• The decline in US government bond yield has spurred equity markets. All the benchmark indices recorded a positive performance.
• NDX led the gain after appreciating by more than 1% in a day. Whereas S&P 500 is said to enter the bull market, up 20% from the Oct-22 low.
• In less than a week US monetary authority will decide their policy. CME FedWatch indicates that 74.8% probability of rate pause.
• US economy again showing the weakening on its job markets. The initial jobless claims ended June 3, 2023 hit 261k pointing 3 consecutive periods of increase and the highest since Oct-21.
• Given that job market indicators to slowing down, Fed’s rate pause narrative is now dominating.
• However, some expect that the current state of global economy might be more resilient that previously expected.
• The world economy is expected to experience a slowdown rather than a recession. Recent data release showed that Japan’s final reading for 1Q23 GDP expanded 0.7% QoQ, beating consensus estimate of 0.5% QoQ growth.
Domestic Market Updates
• The benchmark series of LCY government bond prices tended to be mixed yesterday with the benchmark 5-year yield (FR0095) fell 1 bps and still below 6% and 10-year yield (FR0096) rose 2 bps to 6.34%.
• The IDR has depreciated against the greenback and closed at IDR14,895/USD from IDR14,878/USD on previous day or weakening by 0.12%. Risk perception still manageable and hovering around 85 bps.
• Unlike in the government bond market, domestic equity market proxied by JCI remained on the bear side scenario and now approaching 6,600 psychological level.
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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