Global Market Update
• The benchmark 10-year UST yield fell 6 bps to 2.40% on Tuesday (03/29/22).
• Spread between 2-10 year UST was nearly flat now. Overall, yields on UST fell 1-5 bps along the curve yesterday.
• Historically the inverted yield curve has indicated the sign of economic recession for US, as shorter term interest rate is higher than its longer term.
• On the data front, US Feb Job Openings and Labor Turnover Survey (JOLTS) came with 11.3mn job openings, higher than the 11.1mn expected.
• Fed’s chair Powell has pointed out the Fed may increase rate by 50 bps in the coming meeting and start to reduce its balance sheet soon.
• However given the possibility that the Fed would be more aggressive in tightening its monetary policy it justifies recent increase in short term rates.
• US equity market jumped with S&P 500 and Nasdaq Composite was up more than 1% after Russia said that they would drastically reduce their military activity near Kyiv.
• On the other hand, investors also monitor the development of Covid-19 cases in China that spike to a worst level since the pandemic begin.
Domestic Market Update
• The price of majority IDR denominated government bond weakened on Tuesday (03/29/22). The benchmark 10-year Indo GB rose 4 bps to 6.75%.
• The IDR value weakened against USD to the level of IDR14,370/USD yesterday (vs IDR14,360/USD previous day).
• However, risk premium which is reflected by the 5-year Indo CDS was down from 94.00 bps to 83.41 bps.
• The government issued 7 series of SUN in yesterday's auction with the issuance value reaching IDR17.05tn. The incoming bids reached IDR41.62tn.
• The total incoming bids value in yesterday's auction were lower than the previous auction which hit IDR49.16tn.
• This occurred amidst rising US government bond yields in response to the possibility of more aggressive monetary policy from the Fed.
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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