Global Market Update
• The benchmark 10-year UST yield climbed to 2.48% on Friday (03/25/22), reaching to 2.5 year highs.
• On a weekly basis, overall UST yields rose 10-38 bps in the past week.
• Market continues to anticipate more aggressive tightening from the Fed and expecting 50 bps FFR hike in the next FOMC meeting.
• Albeit the higher inflation, Michigan 5 Year Inflation Expectation showed that it is still hovering around 3% indicating that inflation to subside later on.
• However US mortgage rates jumped significantly with 30-year fixed rate soared closer to 5%.
• Japan reported an increase of 1.3% YoY in Mar-22 CPI. The actual figure was higher than the previous month at 1% YoY.
• On Thursday, NATO committed extra troops along its eastern flank. In addition, the U.K. and U.S. announced more sanctions against Russian elites and officials.
Domestic Market Update
• The price of majority IDR denominated government bond moved relatively sideways last week (03/25/22). The benchmark 10-year Indo GB yield stayed at 6.68%.
• The IDR value slightly strengthened against USD to the level of IDR14,346/USD last week (vs IDR14,352/USD previous day).
• Risk premium which is reflected by the 5-year Indo CDS was down from 96.75 to 95.95 bps.
• Government of Indonesia issued new USD1bn for 10-year maturity and USD750mn for 30-year maturity through SEC registered shelf take down on March 23, 2022.
• Government also conducted a debt switch auction last week with the total incoming bids of IDR5.92tn, while the awarded values were IDR3.76tn.
• On the data front, Indonesia’s International Investment Position (IIP)recorded a net liability totalling USD278.6 billion in 2021 (23.5% of GDP), down from USD280.0 billion (26.4% of GDP) at the end of 2020.
• The lower net liability was driven by a USD26.5 billion (6.6% yoy) increase in the FFA, dominated by other investment assets and reserve assets, which outpaced the USD25.1 billion (3.7% yoy) gain on the FFL side, primarily from direct investment and portfolio investment liabilities.
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.
