Global Market Updates
• Yields on the US government bond keep increasing despite a less hawkish Fed’s chair Powell speech last week.
• The short term bond of 2-year benchmark yield increased marginally by 1 bps to 4.27%, whereas the 10-year benchmark rose by 3 bps to 3.68% on Friday (May 19, 2023).
• Chair Powell said that recent banking turmoil could mean the interest rates won’t raise higher than expected to tame inflation.
• However, Chair Powell remained reiterating that inflation still high and the urgency to bring back price stability is still on the table.
• US equity indices declined on the last trading day last week. The DJI was down by 0.33%, S&P 500 fell 0.14% and NDX dropped 0.24%.
• Japan’s annual inflation rate increased 3.5% YoY in Apr-23 pointing higher than previous month of 3.2% YoY and market estimate of 2.5% YoY increase despite in-line core inflation that increased 3.4% YoY.
• China maintained its Loan Prime Rate for 1-Y/5-Y at 3.65%/4.30% as widely expected by market participants.
Domestic Market Updates
• The benchmark LCY government bond price traded down on May 19, 2023. All the benchmark series price fell on Friday last week.
• FR0096 yield rose 6 bps and closed at 6.41% while FR0095 yield also increased with the same magnitude and closed at 6.09% at the same time.
• The IDR has depreciated against other major currencies and approaching IDR15,000/USD again. On Friday, the IDR fell against the USD by 0.41% and closed at IDR14,930/USD despite lower CDS.
• Bank Indonesia (BI) reported foreign investors net bought SBN of IDR8.47tn during May 14 17, 2023. Continuous foreign inflows helped domestic government bond to be relatively stable.
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 6.40-6.55% for today.
• Attractive Indo GB series to be traded today : FR0070, FR0077, FR0081, FR0090, FR0091, FR0088, FR0093 and FR0062.
MNCS Research
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