Global Market Update
• Yields on the benchmark US Treasury notes have risen along the curve starting this week ahead of FOMC meeting.
• The short-term US Treasury Note for 2-year benchmark jumped 14 bps to 3.98% on Monday (03/20/23). Yield again approaching 4.00% level.
• At the same time, the long-term benchmark yield for 10-year increased 6 bps to 3.49% yesterday.
• Despite higher government bond yields, US equity indices rebounded yesterday with Dow Jones led the gain after rising 1.20%, followed by S&P 500 and Nasdaq Composite posting 0.89% and 0.39% appreciation respectively.
• Markets are looking for Fed’s monetary policy in the upcoming two days FOMC meeting.
• There is 73.1% probability Fed will raise 25 bps FFR this time according to CME FedWatch as officials continuously reiterating high inflation and stronger than expected US economic data despite banking turmoil.
• PBoC has decided to maintain interest rate unchanged with LPR 1-year/5-year at 3.65% and 4.3% respectively.
Domestic Market Update
• Domestic currency government bond prices closed mixed on Monday (03/20/23).
• Yield on the benchmark 10-year (FR0096) was flat and stayed at 6.88% yesterday.
• The IDR weakened against USD and closed at 15,360/USD on Monday (vs IDR15,45/USD last week).
• Indonesia’s 5-year CDS jumped to 120.19 bps yesterday after closing at 105.04 bps last week.
• BI reported Indonesia International Investment Position recorded a net liabilities of USD252.2bn in 4Q22 lower than previous quarter of USD262.6bn driven by increasing financial asset position.
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 6.75-6.95% for today.
• Attractive Indo GB series to be traded today : FR0070, FR0077, FR0081, FR0091, FR0096.
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