Global Market Update
• UST yields were mostly lower yesterday (03/30/22). Yields on US government bond was down 3-7 bps along the curve.
• The benchmark 10-year UST yield fell 5 bps to 2.35%. Furthermore after experiencing an inverted yield curve for 5-30 year UST note, now the spread turned to positive territory.
• An inverted bond yield has sparked jitters in the market for the potential of upcoming recession.
• Meanwhile on the data front, US ADP employment change recorded an increase of 455k in Mar-22, higher than market estimate of 450k yet lower than previous month at 486k.
• The US economy expanded an annualized 6.9% in 4Q21, 0.1 percentage point lower than in the second estimate.
• Last night, Wall Street was closed lower. DJI was down 0.19%; S&P 500 dropped 0.63% and Nasdaq Composite came at worst and fell by 1.21%.
Domestic Market Update
• The price of majority IDR denominated government bond strengthened on Wednesday (03/30/22).
• The benchmark 10-year Indo GB was 1 bps lower and closed at 6.74%.
• The IDR value strengthened against USD to the level of IDR14,344/USD yesterday (vs IDR14,370/USD previous day).
• Risk premium which is reflected by the 5-year Indo CDS continue to fall and was at 82.43 bps yesterday (vs 83.41 bps in the previous day).
• Ahead of the Ramadhan fasting month, several commodity prices have been observed to increase, such as cooking oil, which is now in the range of >IDR20,000/liter.
• We estimate that the increase in the price of basic foodstuffs will have an impact on inflation in Mar-22. CPI potentially rise +0.59% MoM/+2.57% YoY.
• We think that potentially higher inflation this year may result to higher government bond yield.
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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