Global Market Updates
• Yields on the US government bond keep rising as Fed’s officials shared a view more rate hikes still needed to cool down the inflation despite there is a positive signal on debt ceiling deal.
• The short term bond of 2-year benchmark yield increased 10 bps to 4.26%, whereas the 10-year benchmark rose by 8 bps to 3.65% on yesterday.
• Rising yields in the government bond market has not triggered equity market correction this time. All the benchmark equity index recorded an increase.
• The DJI was up by 0.34%, at the same time S&P 500 rose 0.94%, whereas, NDX led the gain after appreciating 1.51%.
• Some Fed’s officials continued to reiterate that recent economic data release won’t justify a pause. Following the statements, market participants bet there is 36.7% probability of 25 bps hike on the upcoming meeting.
• However, US debt ceiling negotiation appeared to have a positive progress that deals would be reached ahead of June 1, 2023.
Domestic Market Updates
• The benchmark LCY government bond price traded up on May 17, 2023 with the 10-year yield decreased by 3 bps to 6.36%.
• Besides that, other benchmark particularly on the shorter-term also experienced a yield decline.
• The IDR depreciated against against the USD by 0.33% and closed at IDR14,869/USD before the holiday.
• Indonesia’s 5-year CDS is on the track to fall to near 90 bps as recent data showed a decline to 93.69 bps after stabilizing around 95 bps previously.
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 6.35-6.45% for today.
• Attractive Indo GB series to be traded today : FR0046, FR0070, FR0077, FR0084, FR0086, FR0091, FR0088, FR0050.
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