Global Market Updates
• US treasury notes yield traded lower on Wednesday (May 10, 2023) as inflation data release came in-line with market expectation.
• The short term bond of 2-year benchmark yield dropped 11 bps to 3.91% and yield fell back to below 4.00%.
• Meanwhile the long-term 10-year benchmark yield fell 8 bps and closed at 3.44% at the same time.
• US reported 0.4% inflation in Apr-23 or with the annual rate of 4.9% by which in-line with consensus estimate.
• US inflation rate keep slowing down after peaking in Jun-22 that hit 9.1% YoY. The latest inflation figure was the lowest record since Apr-21 marking the lowest pace in the last 2 years.
• Given the disinflation momentum, US NDX jumped 1.04% last night, whereas S&P 500 rose 0.45% and DJI was flattish.
• Most of market participants expect Fed to pause the rate hike cycle in the upcoming FOMC meeting in Jun-23
• There is 92.7% probability of Fed to maintain benchmark policy rate at 5.00-5.25% or implying current rate.
Domestic Market Updates
• The benchmark LCY government bond traded up yesterday along with IDR appreciation and improving risk sentiments.
• The benchmark 10-year (FR0096) yield declined 2 bps and closed at 6.45% on Wednesday (May 10,2023).
• The IDR mostly appreciated against major currencies. The local currency strengthened 0.07% against USD and closed at IDR14,732/USD.
• Indonesia’s 5-year CDS also inched lower by 0.7% on a daily basis to 98.4 bps at the same time.
Market Forecast
• Given the recent development on global and domestic market, we expect the 10 year Indo GB yield to move within a range of 6.40-6.60% for today.
• Attractive Indo GB series to be traded today : FR0046, FR0070, FR0077, FR0081, FR0084, FR0096, and FR0067.
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