Company Update

09 Mei 2022

Fixed Income Report May 9, 2022

Global Market Update
• The 10-year UST yield rose and topping 3% last week. It came after the Fed raised FFR by 50 bps bringing the target to 0.75-1.00%.
• Fed’s decision to hike interest rate by 50 bps was in line with its previous guidance and market expectation.
• The hike came as the response of US central bank to fight against a 4 decade highs of inflation.
• Another G4 central bank that follow the suite was BoE. The UK’s central bank increased its policy rate to 13-year highs.
• BoE increased the policy rate by 25 bps bringing it to 1% after seeing inflation could spike to 10%.
• Majority of global government bond yield were increasing last week. The 10- year Bund yield rose and topping to above 1.00%.
• Market also focus on the development of Russia-Ukraine conflict as EU impose another economic sanction for Russia including oil embargo.

Domestic Market Update
• Yield on 10-year Indo GB increased 3 bps and was closed at 6.97% just before market closed on Eid Fitr holiday momentum.
• The IDR weakened against USD to IDR 14.480/USD on April 28, 2022 (vs IDR14,115/USD in the previous day).
• Risk premium which is reflected by the 5-year Indo CDS also rose and was closed at 106.74 bps.
• Indonesia’s manufacturing PMI was recorded at 51.9 in Apr-22, implying +0.6 point gain compared to previous month.

Market Projection
• We project Indonesia’s Apr-22 inflation to increase by 3.31% YoY.
• We also forecast Indonesia’s 1Q22 GDP grew 5.03% YoY
• Given the recent development on global and domestic market, we expect the 10 year Indo GB yield to keep steady within a range of 7.00-7.10% for today.
• Attractive Indo GB series to be traded today : FR0070, FR0086, FR0090, FR0078, FR0052, FR0087, FR0091.

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