Company Update

08 Maret 2023

Fixed Income Report March 8, 2023

Global Market Update
• Yield curve inversion in US is getting worse. The 2/10 year yield spread is now stood at 104 bps.
• The short-term benchmark yield of 2-year UST note rose 13 bps in a day and finally hit 5.01%. At the same time, the 10-year yield stayed at 3.97%.
• UST yield curve inversion worsened triggered by Jerome Powell statement hinting that US need not only further interest rate hikes yet also faster.
• Fed’s chair Powell statement has changed the direction of market participants expectation of future policy rates.
• As a result, CME FedWatch tools indicate that markets are now favor a 50 bps for upcoming FOMC meeting, 25 bps higher than previous estimate.
• In Australia, the central bank RBA decided to raise 25 bps interest rate policy to 3.6% in the latest meeting.

Domestic Market Update
• Yield on the benchmark 10-year (FR0096) rose 5 bps to 6.96% on Tuesday (03/07/23).
• The IDR weakened against USD and was closed at IDR15,367/USD yesterday after previously closed at IDR15,295/USD on last week.
• On the other hand, Indonesia’s 5-year CDS keep moving lower and closed at 88.41 bps yesterday.
• Bank Indonesia (BI) reported FX reserves position increased USD900mn in Feb-23 driven by tax receipts and government issuance of global bond.
• SBSN auction results showed lower appetite from investors with incoming bids hit only IDR19.96tn, lower than previous auction at IDR30.45tn.
• The total awarded bid for 6 series SBSN offered in yesterday auction was IDR11tn.

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 6.80-7.00% for today.
• Attractive Indo GB series to be traded today : FR0046, FR0070, FR0077, FR0044, FR0081, FR0086, FR0096, FR0098.

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