Global Market Updates
• Challenges to get the deal on US debt ceiling remains concern among market participants particularly for bonds.
• Yields on US government bond keep rising with the 2-year benchmark rose 4 bps to 4.33%, meanwhile the long-term benchmark of 10-year yielding 3.72% on Monday (May 22, 2023).
• US equity indices closed mixed last night. The DJI dropped 0.42% but S&P 500 and NDX each rose 0.02% and 0.50%.
• US debt ceiling negotiations have stalled last week and is expected to continue until agreement is formed to avert the default risk that is estimated as soon as June 1, 2023.
• On the other hand, mixed sentiments coming from various Fed’s officials also could weigh market sentiments.
• According to Fed’s CME FedWatch, market participants expect US central bank to hold FFR on the upcoming meeting with probability of 84.7%.
Domestic Market Updates
• The benchmark LCY government bond price traded mixed on Monday (May 22, 2023). The benchmark for 10-year (FR0096) yield marginally decreased 1 bps and closed at 6.41%.
• After depreciating against USD & other currencies, finally the local currency strengthened and closed at IDR14,890/USD after appreciating 0.27% against USD.
• Indonesia’s 5-year CDS keeps declining and now approaching to 90 bps and closed at 91.08 bps yesterday.
• As of Apr-23, Indonesia reported a budget surplus of 1.12% GDP driven by government revenue that is still increasing at the pace of 17.3% YoY.
• In addition, the realization of debt financing (net) reached IDR243.9tn or equivalent to 35% of government target. However, going forward revenue moderation is likely & thus MoF keep reiterating prudence aspect in managing state budget.
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.
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