Global Market Update
• The benchmark 10-year UST continued to fall. It was settled down 8 bps to 2.85% on Thursday (05/11/22).
• Yields on UST note fell 3-10 bps along the curve on a daily basis.
• Meanwhile on a weekly period, yields of US government bond dropped 12-21 bps along the curve.
• The fall in UST note yield may indicate that investors are flowing back to safer asset as equity market sell off continued.
• Wall Street indexes were significantly volatile this week. Last night US equity closed mixed.
• DJI and S&P 500 each fell 0.33% and 0.13%, meanwhile Nasdaq Composite was up 0.06%.
• US PPI increased +0.5% MoM in Apr-22, in line with consensus estimate.
• However US core PPI only rose +0.4% MoM at the same period, lower than consensus estimate at +0.6% MoM.
• UK’s 1Q22 GDP recorded an expansion of +0.8% QoQ/+8.7% YoY in a preliminary reading, lower than market expectation at +1.0% QoQ/+9.0% YoY.
• Market focus remains on 3 things : 1) inflation and monetary policy; 2) Russia- Ukraine and 3) Covid-19 in China.
Domestic Market Update
• Yield on 10-year Indo GB moved sideways at 6.38% yesterday.
• The IDR weakened against USD and was closed to IDR 14.598/USD, the lowest in a year.
• Along with IDR depreciation, risk premium 5-year CDS also rose to 127.85 bps yesterday (vs 110.04 bps on previous day).
• On the data front, BI reported domestic retail sales grew +2.6% MoM/+9.3% YoY in Mar-22.
• The increase in retail sales was attributable to improving demand as well as mobility as government continue to relax PPKM amidst dropping Covid-19 cases.
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 7.20-7.40% for today.
• Attractive Indo GB series to be traded today : FR0070, FR0056, FR0090, FR0073, FR0091, FR0068, FR0072.
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