Global Market Update
• The benchmark 10-year UST yield jumped 10 bps to 2.41% on Tuesday (03/22/22).
• On the other hand the 2-year UST yield was consistently hovering above 2% this week.
• Yields on US government bond increased 4-19 bps along the curve yesterday following Powell statement on labor market and inflation.
• Furthermore, Powell also signaled that US central bank needs to be more aggressive in its monetary tightening.
• A more than 25 bps rate hike is likely if necessary and balance sheet reduction could start by May-22.
• Now market participants expect the Fed to raise FFR by 50 bps in the May and June meeting based on Fed Fund Futures data.
• Another downside risk comes from talks between Russia and Ukraine that have failed to make a progress so far.
• Ukraine is said to reject an ultimatum to surrender on its port city Mariupol to Russian forces.
• In addition, risk from pandemic is still haunting with the spread of Omicron sub- variant in Europe and along with China’s worst Covid-19 outbreak since the beginning of the pandemic.
• However US stock market recorded a gain last night. DJI rose 0.74%; S&P 500 jumped 1.13% and Nasdaq Composite was closed 1.95% higher.
Domestic Market Update
• The price of IDR denominated government bond saw a decrease yesterday (03/22/22). The benchmark 10-year Indo GB yield rose 3 bps to 6.72%.
• The IDR value weakened against USD to the level of IDR14,348/USD yesterday (vs IDR14,337/USD previous day).
• Risk premium which is reflected by the 5-year Indo CDS was up from 96.93 bps to 99.48 bps.
• Government has issued IDR2.8 tn of Sharia Securities through auction on Tuesday (03/22/22). The total incoming bids were IDR13.39 tn.
• The total awarded value was significantly lower than indicative target at IDR9 tn. The total incoming bids were also lower than previous auction of IDR15.3 tn on March 08, 2022.
• We believe global monetary policy tightening as well as heightened geopolitical tension to affect investors appetite.
Market Projection
• Given the recent development on global and domestic market, we expect the 10 year Indo GB yield to keep steady within a range of 6.70-6.80% for today.
• Attractive Indo GB series to be traded today : FR0086, FR0090, FR000064, FR0078, FR0087, FR0091.
