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RESEARCH

Company Update

10 Mei 2022

Fixed Income Report May 10, 2022

Global Market Update

• The 10-year UST yield hit 3.18% before retreating to 3.04% on Monday (05/10/22).

• Benchmark 10-year UST yield has hit 3% last week. The UST note yields fell 4- 13 bps along the curve last night.

• US stock market tumbled last night. Dow Jones dropped 1.99%, S&P 500 fell 3.20% and Nasdaq Composite came at worst after losing 4.29%.

• Market continue to focus on aggressive monetary tightening that already initiated by the Fed last week.

• US central bank has raised benchmark policy rate by 50 bps to a target of 0.75-1.00%.

• Tech stocks continue to suffer as it behave like long duration asset.

 

Domestic Market Update

• Yield on 10-year Indo GB jumped 28 bps and was closed at 7.25% to start the first trading day in May-22. This is the highest level in more than 1 year.

• The IDR weakened against USD to IDR 14.573/USD on May 9, 2022 (vs IDR14,480/USD in the previously).

• Risk premium which is reflected by the 5-year Indo CDS also rose and was closed at 130.50 bps.

• We continue to see Indo GB yields to rise following global central bank monetary tightening.

• Indonesia Wholesale Price Index (IHPB) in April-22 posted an increase of +0.97% MoM/+4.22% YoY.

• The highest increase in IHPB was experienced by mining and quarrying posts (+1.44% MoM/+8.58% YoY) in line with the increase in mining commodity prices. We see that future increases in IHPB will be translated into increases in the CPI, which indicates a higher opportunity for higher inflation.

 

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 7.10-7.20% for today.

• Attractive Indo GB series to be traded today : FR0070, FR0086, FR0090, FR0078, FR0052, FR0087, FR0091.

 

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