Global Market Update
• Yields on UST note were traded lower yesterday (05/24/22). Yield on benchmark 10-year UST note dropped 10 bps to 2.75%, or the lowest level in a month.
• US government bond moved in the opposite direction to equity. US stock market was closed mixed.
• DJI was up 0.15% meanwhile S&P 500 and Nasdaq Composite fell 0.81% and 2.35%.
• ECB President Christine Lagarde made a comment on the path of CB interest rates in the coming months.
• Lagarde said that ECB is likely to exit negative interest rates by the end of 3Q22.
• Markets now see +110 basis points of rate hikes for FY22F, more than a quarter of a percentage point at each of the ECB's policy meetings from July.
Domestic Market Update
• The benchmark 10-year Indo GB yield increased 4 bps to 7.20% on Tuesday (05/24/22) in line with our daily forecast range.
• The IDR strengthened against USD to IDR14,661/USD from IDR14,672/USD on the previous day.
• Indonesia risk premium 5-year CDS was closed at 101.32 bps yesterday.
• Government has conducted debt securities auction yesterday. The incoming bids amounted to IDR39.4tn, higher than previous auction of IDR19.7tn. The total nominal awarded for the 7 series was IDR20tn.
• BI decided to hold its policy rate at 3.5% but to accelerate the increase of reserves requirement for conventional and sharia bank as the part of liquidity normalization measures.
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 move within a range of 7.10-7.30% for today.
• Attractive Indo GB series to be traded today : FR0070, FR0077, FR0084, FR0064, FR0078, FR0091, FR0068, FR0072.
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