Global Market Update
• Benchmark 10-year UST note yield was closed slightly lower at 2.74% on Friday (05/27/22).
• The yield curve between 2-year and 10-year notes flattened 1 bps to 26 bps and the benchmark yields fell to nearly 6-weeks lows.
• Lower UST note yield came after Fed’s preferred inflation gauge (core PCE price) showed a moderation.
• US core PCE price index grew +4.9% YoY in Apr-22 in line with market expectation and lower than previous month increase of +5.2% YoY.
• Market participant expects +50 bps increase in FFR at each Fed’s June & July meetings.
• US equity market jumped with DJI rose +1.76%; S&P 500 was up +2.47% and Nasdaq Composite lead all gain with +3.33% on the last trading day in the previous week.
Domestic Market Update
• The benchmark 10-year Indo GB yield (FR0091) decreased 2 bps to 7.07% on Friday (05/27/22).
• The IDR strengthened against USD to IDR 14,577/USD on Friday from IDR14,613/USD on the previous day.
• Indonesia risk premium 5-year CDS was closed at 95.66 bps on the last trading day in the previous week
• Bank Indonesia (BI) reported M2 position was recorded at IDR7,911.3 tn (+13.6% YoY) in Apr-22, higher than Mar-22 growth of +13.3% YoY.
• The increase in M2 growth in Apr-22 was mainly influenced by the continued acceleration of lending. Credit disbursement in Apr-22 grew by +8.8% YoY, higher than previous month growth of +6.4% 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 7.00-7.20% for today.
• Attractive Indo GB series to be traded today : FR0070, FR0077, FR0084, FR0064, FR0078, FR0091, FR0068, FR0072.
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