Global Market Update
• Yields on UST note dropped 1-6 bps along the curve on Thursday (05/19/22).
• The benchmark 10-year UST note yield fell 4 bps to 2.85% at the same time.
• US equity market continue to fall. DJI dropped -0.75%; S&P fell -0.59% while Nasdaq Composite was -0.26% lower.
• Tightening monetary policy remains the dominant sentiment which trigger risky asset sell off.
• Investors favor safe haven assets such as government bond during stock market sell off.
• Recently Fed’s Chair Powell has said that US CB will not hesitate to keep raising interest rates until inflation falls in a clear and convincing manner.
• The probability of FFR target at 2.75-3.00% in Dec-22 is now at 50%, indicating that US CB will be more aggressive in tightening in the coming meeting.
Domestic Market Update
• Yield on 10-year Indo GB was closed at 7.29% on Thursday (05/19/22), in line with our expectation.
• The IDR continued to weaken against USD and was closed to IDR 14.733/USD, the worst in a year.
• Indonesia 5-year CDS also increased from 108.16 bps to 116,87 bps yesterday.
• On the data front. car sales in Indonesia reached 82,877 units in April-22. This figure is lower than March-22 which reached 98,536 units.
• Car sales in Indonesia have recovered and reached pre-pandemic levels in line with the continued strengthening of the domestic economy and the decline in Covid-19 cases, which encourages public mobility.
Market Projection
• Given the recent development on global and domestic market and after a high yield spike, 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, FR0077, FR0064, FR0078, FR0091, FR0068, FR0072.
Disclaimer On
