Company Update

10 November 2022

Fixed Income Report November 10, 2022

Global Market Update
• The benchmark 10-year UST note yield decreased 2 bps to 4.10% on Wednesday (11/09/22).
• At the same time, the benchmark for short term rate of 2-year maturity edged lower 7 bps to 4.58%.
• Yield curve inversion narrowed and the spread of 2/10 year benchmark stood at -48 bps (vs -53 bps the previous day).
• US equities indices fell significantly. The DJI was closed 1.95% lower; while S&P 500 declined by 2.08% and Nasdaq Composite fell by 2.48%.
• China’s inflation rate decelerated to 2.1% YoY in Oct-22 (vs 2.8% YoY in Sep-22) and lower compared to the market consensus of 2.4% YoY, mainly due to easing of food inflation to 7% (vs 8.8% in Sep-22) and non-food inflation to 1.1% (vs 1.5% in Sep-22).
• Japan reported a sharp decline in current account surplus to JPY909.3 bn in Sep-22 (vs JPY1,653.2 bn in Sep-21) while exceeding market consensus of JPY234.5 bn, with exports growth of 27.5% YoY and imports jumping by 47.9% YoY due to high commodity prices and a weakening in yen.
Domestic Market Update
• The benchmark 10-year Indo GB yield (FR0091) fell 8 bps to 7.33% on Wednesday (11/09/22).
• Indonesia’s risk perception slightly increased, while, at the same time domestic currency IDR appreciated against USD.
• Indonesia’s 5-year CDS stood at 122.65 bps yesterday (vs 122.65 the previous day).
• The IDR strengthened against USD and was closed at IDR15,657/USD on Wednesday (vs IDR15,698/USD the previous day).
• Indonesian retail sales grew +4.6% YoY in September 2022 (vs +4.9% YoY Aug-22). Retail sales is expected to increase +3.1% MoM/+4.51% YoY in October 2022.
• Retail sales performance in September 2022 was supported by strengthening consumption of food, beverages and tobacco as well as other household equipment groups amid slowing growth in the fuel and spare parts category. The drivers for retail sales for October-2022 will be from food, beverages and tobacco as well as information and communication equipment.
• The survey also reported a rise in Price Expectation Index for Dec-22 and Mar-23, based upon increasing production costs and seasonal demands for Christmas and the month of Ramadhan.
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 7.25-7.45% for today.
• Attractive Indo GB series to be traded today : FR0070, FR0077, FR0044, FR0095, FR0085, FR0091, FR0096.
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