Global Market Update
• US treasury notes yield recorded a decline ahead of US FOMC meeting and weaker than expected economic data.
• The benchark 10-year UST note yield fell to 3.43% despite markets pricing 86.7% probability of 25 bps hike in May-23 FOMC meeting.
• US stock indices fell sharply and recording more than 1% of correction on Tuesday (May 2, 2023).
• Job market ease in Mar-23 reflected by lower than expected job openings. JOLTs Job Openings came at 9.59mn (vs 9.97mn in Feb-23 and 9.78mn consensus estimate)
• Risk also coming from failure of US to meet its obligation of debt ceiling hike is not approved.
• Elsewhere in Europe, the flash annual inflation figure came in-line with market expectation rising with the pace of 7.0% YoY in Apr-23.
• RBA unexpectedly decided to raise 25 bps cash rate in May-23 after maintaining the benchmark policy rate at 3.60% and marking a contrast to broad market expectation of no hike in May-23.
Domestic Market Update
• The LCY government bond prices were traded mixed yesterday amidst declining JCI and IDR depreciation.
• The benchmark 10-year (FR0096) yield experienced 1 bps decline to 6.50% yesterday.
• JCI posted a correction of 0.76% at the same time, after rebounding last week. For now, markets seem to reflect higher risk premium for owning stocks.
• Furthermore, the IDR also depreciated against USD and closed at 14,714/USD after closed at 14,674/USD yesterday.
• Indonesia’s 5-year CDS slightly increased and closed at 96.66 bps at the same time.
• Indonesia’s economy is considered to remain resilient. The manufacturing PMI stood at 52.9 in Apr-23 higher than previous month of 51.7.
• Statistics Indonesia also reported an annual inflation of 4.33% YoY in Apr-22. The declining inflation rate was attributable to adequate supply due to harvesting season.
• Furthermore, core CPI also recorded an annual increase of 2.83% YoY in Apr-22, lower than previous month of 2.94% YoY.
Market Projection
• Given the recent development on global and domestic market, we expect the 10 year Indo GB yield to move within a range of 6.50-6.70% for today.
• Attractive Indo GB series to be traded today : FR0070, FR0077, FR0044, FR0081, FR0084, FR0086, and FR0088.
MNCS Research
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