Global Market Update
• US government bond yields fell sharply last week as market concerns on the likelihood of financial crisis amidst high borrowing cost.
• Yield on the short-term 2-year UST note declined 28 bps to 4.59% on Friday (03/10/23).
• On the other hand, yield on benchmark 10-year UST note fell 21 bps to 3.71% at the same time.
• US broad market equity indices dipped in red with Nasdaq Composite came at worst after falling 1.76% on the previous week last trading day.
• US equity indices also recorded a negative weekly return last week with nearly 5% decline.
• Financial markets were spooked by the SVB regulatory shutdown on Friday last week.
• The SVB has recorded an unrealized lost of USD17bn as at the end of 2022 on its securities portfolio as aggressive monetary tightening deteriorated bond values.
• Market pricing/expectation on Mar-23 FOMC meeting has shifted towards a more dovish stance.
• According to CME FedWatch market participants expect 25 bps hike of FFR in Mar-23, lower than previous bet of 50 bps hike.
Domestic Market Update
• Most of domestic currency government bond prices increased on Friday (03/10/23).
• Yield on the benchmark 10-year (FR0096) declined 6 bps and falling to 6.93% on the last week trading day.
• Concerns around SVB shutdown has induced IDR depreciation against USD and rising CDS to hit 100 bps again.
• The IDR weakened against USD and closed at 15,450/USD on Friday (vs IDR15,433/USD on the previous day).
• On the other hand, Indonesia’s 5-year CDS increased 6 bps and reaching 100.22 bps on Friday.
• Furthermore, Bank Indonesia (BI) reported a net sell of IDR3.0tn in SBN market during the period of 6-9 March 2023.
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 6.90-7.10% for today.
• Attractive Indo GB series to be traded today : FR0063, FR0046, FR0081, FR0091, FR0096.
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