Global Market Updates
• Wall Street closed in commemoration of Memorial Day to start this week. However markets were quite relief after progressive negotiation of debt ceiling was reached.
• Nearly two weeks ahead of FOMC meeting, markets bet that Fed would raise another 25 bps of FFR with the probability of 63%.
• Another rate hike now dominating market expectation as Fed officials continued to reiterate and and emphasizing on price stability.
• Sentiments across markets were minimum given lack of data release while investors will pay attention on job reports.
• Elsewhere in Asia, Japan reported its unemployment rate dropped to 2.6% in Apr-23 from 14-month high of 2.8% in the previous month. Furthermore, Japan unemployment rate was also below market estimates of 2.7%.
Domestic Market Updates
• Most of benchmark short-term & long-term LCY government bond prices were traded up on Monday (May 29, 2023).
• The benchmark of 5-year government bond yield fell 2 bps to 6.04%, whereas the benchmark 10-year yield dropped 3 bps to 6.38% yesterday.
• The IDR has again depreciated against USD and other currencies. It was traded and closed at IDR14,972/USD and approaching IDR15,000/USD psychological level.
• However, at the same time, Indonesia’s 5-year CDS approaching to 90 bps again after previously stabilized at 92 bps.
• Government has received IDR58.44tn incoming bids in yesterday’s SUN auction. The total incoming bids were indeed lower than in previous auction which reached IDR65.45tn.
• However, of the 8 series offered, the total awarded bids were at IDR15tn or IDR2tn below its indicative target.
• Considering recent budget surplus and fiscal consolidation, government bond supply risk could be reduced and thus favoring a more stable prices.
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.
MNCS Research
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