13 November 2023
Fixed Income Report November 13, 2023
Global Market Updates
• Wall Street equities extended their gains Friday (Nov 10, 2023) bolstered by chip and tech stocks, looking past the consensus-missing consumer data and a hawkishly-tilted Fedspeak ambience.
• The UST 10-yr and 2-yr yields each stood its ground at 4.61% and 5.04%, weighed by hawkish Fed comments but found its way back to stabilize.
• Overall, we see that rising issuances and a pertinent downside in economic growth for the US would weigh on UST, and we haven’t seen the higher-for-longer.
• A rush of high-yielding US corporate bond sales are expected to carry onwards this week, stacking on USD25-30bn on last week’s USD44bn in sales, accelerated ahead of the anticipated slowdown approaching end-of-year’s holiday season. If absorption proves to be solid we might see USTs slacking on the flipside.
• Weak consumer data depicted by University of Michigan US Nov-23 consumer sentiment index’s slack to 60.4 (vs expectations of 63.7) hadn’t budged the equity market – whilst probably bullish for bonds – but had the DXY index’s rally put to a halt.
• Hedge funds and other large speculators on Wall Street, however, still holds long on the USD backed by Fed’s persistent higher-for-longer stance added with its appeal as a safe haven amid geopolitical unrest.
• Following on that note, the Fed apparently still has rate hikes on the table, especially so if inflation stagnant. We believe that could be the case, seeing that US’s M2 money supply still at decades highs and the Fed so far still favors its balance sheet deloading approach.
Domestic Market Updates
• Indonesian benchmark series of LCY government mostly settled lower Friday (Nov 10, 2023), with the 10-yr benchmark yield edging up to 6.81% while the 20-yr benchmark yield ticked down 1 bps.
• IDR continued to weaken against the USD (USD/IDR rose 0.26% to 15,695) Friday; IDR might find breathing room today after last week’s bearish data for USD.
• We continue to see declining appetite towards the SBN-back assets, SRBI, as Friday’s auction which had higher range of bidding rates and garnered IDR6tn of awarded bids, lower than the previous week’s ID10tn after the Fed dovish sentiment, which has now simmered.
• PT Barito Pacific aims to offer their phase II of Barito Pacific Sustainable Bonds III amounting to IDR1tn in 21-23 Nov, 2023; IDR700bn from series A yielding 8,5% p.a. for 3 years and IDR300bn from series B yielding 9,5% p.a. for 5 years.
Market Forecast
• Given the recent developments that unfolded within the global and domestic markets, we expect the 10-yr Indo GB yield to move within the range of 6.75-6.90% for today.
• Attractive Indo GB series to be traded today : FR0040, FR0081, FR0096, FR0100.
Disclaimer On
FR40
FR81
FR96
FR100
