Global Market Updates
• US treasury notes yield was traded up by 5-9 bps along the benchmark series on the last day of trading in the previous week.
• The short term bond of 2-year benchmark yield increased 9 bps to 3.99% whereas the 10-year benchmark rose by 8 bps to 3.47% on Friday (May 12, 2023).
• Most of US equity indices fell in response to rising government bond yield. The DJI was slightly flattish while S&P 500 and NDX both corrected 0.16% and 0.36% respectively.
• Albeit there is a signal of rate hike pause in the near future, but Fed’s Chair Powell reiterated that battle against inflation is not over yet.
• Indeed, US inflation data showed a gradual easing with the pace of annual inflation has declined to the lowest pace in the last 2 years in Apr-23.
Domestic Market Updates
• The benchmark LCY government bond traded up on May 12, 2023 with the 10-year yield fell marginally by 1 bps to 6.38%.
• Besides that, other benchmark such also recorded a yield decline (FR0095 : -2bps; FR0098 : -5bps; FR0098 : -3bps) on a daily basis.
• Investors will have additional liquidity from the maturing of FR0063 and this could provide a positive catalyst for the government bond market.
• The IDR depreciated against the USD by 0.19% on a daily basis and closed at IDR14.751/USD. Meanwhile the 5-year CDS stabilized at 95 bps.
• Bank Indonesia (BI) reported a net foreign selling in the domestic financial market during May 8-11. Net foreign selling in SBN amounted at IDR2.94tn.
• Markets also await for Indonesia’s international trade data that will be released today. May expects a contraction in annal exports and imports particularly on the softening of prices on top of high base effects, yet still expecting a USD2.91bn of trade surplus in Apr-23.
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 6.30-6.50% for today.
• Attractive Indo GB series to be traded today : FR0070, FR0077, FR0044, FR0040, FR0084, FR0042, FR0096.
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