Global Market Update
• The benchmark 10-year UST yield climbed to 2.37% on Thursday (03/24/22) amidst strong job data.
• On the other hand the 2-year UST yield was still hovering above 2% this week.
• US Labor Department reported initial jobless claims totalled 187,000 last week, marking the lowest level since 1969.
• Fed’s Chair Powell has quoted that US strong labor market and too high inflation recently.
• US central bank is expected to take a more aggressive policy tightening even with 50 bps increase in FFR in the coming meeting.
• Despite plan to further tighten its monetary policy, US monetary authority remains behind the curve as inflation run to its highest level in 4 decades.
• US equity market recorded a strong performance last night. DJI and S&P 500 rose 1.02% and 1.43% respectively. Meanwhile Nasdaq Composite jumped 1.93%.
• US and NATO allies is expected to send additional assistance for Ukraine and impose extra sanctions on Russia.
Domestic Market Update
• The price of majority IDR denominated government bond moved relatively sideways yesterday (03/24/22). The benchmark 10-year Indo GB yield slipped 3 bps to 6.68%.
• The IDR value slightly weakened against USD to the level of IDR14,352/USD yesterday (vs IDR14,347/USD previous day).
• Risk premium which is reflected by the 5-year Indo CDS was down from 97.44 bps to 96.75 bps.
• Broad money supply (M2) grew +12.5% YoY to IDR7,672.4 tn in Feb-22. M1 rose +18.3% YoY while quasy money increased +5.9% YoY during the same period.
• The increase in money supply was influenced by credit expansion (+5.9% YoY).
• Given the recent easing mobility we believe this would translate into higher money velocity.
• Along with higher commodity price this would result in higher inflation in the near future.
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.
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