Company Update

26 Mei 2023

Fixed Income Report May 26, 2023

Global Market Updates
• US government bond prices were again traded down weighed by sentiment of its recent sovereign credit rating amidst ongoing negotiation of debt ceilings.
• Fitch Ratings provide an AAA rating with negative watch on US. Despite Fitch Ratings expect for resolution ahead the crucial time of US may not meet their obligation, yields on government bond keep rising.
• Yields on US government bond for the long-term 10-year rose 7 bps to 3.82% while the short-term bond yield jumped 15 bps to 4.53% on Thursday (May 25, 2023)
• US stock market were mixed last night with the DJI fell 0.11% but NDX appreciated 1.71% and leading the gain.
• Markets recently bet on 52.2% of another 25 bps hike on FOMC’s upcoming meeting after previously expect a pause.

Domestic Market Updates
• The benchmark LCY government bond yield for 10-year (FR0096) was flat at 6.41% on Thursday (May 25, 2023).
• The IDR has depreciated against USD and closed at IDR14,953/USD. The domestic currency is again approaching to psychological level of IDR15,000/USD given DXY appreciation recently.
• Bank Indonesia (BI) maintained its 7-day reverse repo rate at 5.75% and reiterating that domestic liquidity should be sufficient to support growth.
• Interestingly, BI’s governor Perry Warjiyo, unlike in the previous press conference, did not state that Indonesia’s economic growth potential would be slightly upward bias of 4.5-5.3% for FY23E given moderation of fixed investment.
• There may be several factors affecting investment as this year also marking a political year by which may of economic actors tend to wait and see prior to making decision for any investment which could limit potential upside of output growth in our view.
• However, with the still massive net foreign purchase in the government bond & prudent fiscal management, this could help stabilize domestic government bond market.

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 : FR0090, FR0054, FR0091, FR0096 and FR0062.

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