Global Market Update
• Yields on the benchmark US Treasury notes increased 2-8 bps along the curve on Tuesday (03/28/23).
• The benchmark 10-year UST note yield rose 2 bps to 3.57% last night. At the same time, yield on the short-term 2-year note also traded back to above 4.00%.
• US stock market posted a decline last night led by tech stocks. Nasdaq Composite fell 0.45%.
• Meanwhile, DJI as well as S&P 500 dropped 0.12% and 0.16% respectively at the same time.
• After US banking turmoil ease, markets are back to assess US future monetary policy.
• CME FedWatch showed there is 62.4% probability of Fed would keep interest rate unchanged at 4.75-5.00% and 37.6% of 25 bps hike possibility in May-23.
• Interestingly, bets on pivot starts to emerge indicated by 5.0% probability of cutting 25 bps in Jun-23.
• Market expectation that Fed would loosen its monetary policy increase gradually reflected by 38.0% of 25 bps cut in Jul-23.
Domestic Market Update
• Yield on the benchmark 10-year (FR0096) slightly increased 2 bps to 6.77% yesterday.
• The IDR strengthened against USD and closed at 15,087/USD on Tuesday (vs IDR15,163/USD on Monday).
• Indonesia’s 5-year CDS finally dropped below 110 bps and currently stood at 108.86 bps.
• SUN auction result : total incoming bids hit IDR29.34tn and total awarded bid at IDR20.tn.
• Total incoming bids in yesterday’s auction was significantly lower than previous auction which recorded a total of IDR52.66tn.
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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