Global Market Update
• Yields on the benchmark US Treasury notes keep falling as markets weighed on banking turmoil.
• The benchmark 10-year UST note yield fell 7 bps to 3.36% on Friday (03/24/22). At the same time, yield on the short-term 2-year note also inched lower to 3.78%.
• US stock market closed the previous week with gain. DJI rose 0.41% on the last trading day, while S&P 500 led with 0.56% appreciation and Nasdaq Composite inched up 0.31%.
• In contrast to broad US stock indices which recorded gain, European benchmark equity indices fell sharply.
• GDAX declined 1.66% and FTSE 100 dipped 1.26%. The sudden jump in Deutsche Bank CDS has sent its stock price to plunge on Friday.
• Despite policymakers keep saying that banking condition remains solid to restore confidence, markets seem to move in opposite way.
• An immediate responses could help to limit the contagion risk, yet, higher volatility is expected to stay.
Domestic Market Update
• Most of domestic currency government bond prices closed higher on Friday (03/24/23).
• Yield on the benchmark 10-year (FR0096) fell 9 bps to 6.79% on Friday (03/24/23).
• The IDR strengthened against USD and closed at 15,155/USD on Friday (vs IDR15,345/USD on Tuesday).
• Upon the resumption of trading day, Indonesia’s 5-year CDS was flattish at 113 bps.
• Bank Indonesia reported the broad money (M2) expanded at a pace of 7.9% YoY in Feb-23, lower than in Jan-23 which grew 8.2% YoY.
• Despite having a lower pace of M2 growth, domestic loan increased 10.4% YoY in Feb-23, better than 10.2% YoY growth in Jan-23.
• In addition, Bank Indonesia also reported a net foreign selling of IDR140bn in domestic financial market (both in bond & equity market). The low selling pressure was also affected by a short-trading period last week.
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 : FR0063, FR0070, FR0077, FR0081, FR0085, FR0072, FR0076.
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