17 November 2023
Fixed Income Report November 17, 2023
Global Market Updates
• Wall Street equities were mixed Thursday (Nov 16, 2023), DJI closed down-0.13%, S&P 500 went up +0.12%, and Nasdaq climbed +0.07%. Equity movements were mixed due to dissapointing corporate earning results.
• US Treasury 10-yr yields fell by 8 bps, landing at 4.45%. The shorter-termed UST 2-yr yields followed suit by slipping 7 bps to 4.83%.
• Yields fell, supported by several factors: encouraging Oct-23 manufacturing production, weekly jobless claim rose 13k to 231k than expectation 220k, Nov-23 NAHB housing market index fell 6 pts to 34, weaker than expectations of 40, and also Fed’s Mester comments that signaled they favor a pause in Fed rate hikes.
• Market participants now anticipate 84% chance for that same -25 bps rate cut at the Apr 30-May 1, 2024 FOMC meeting.
• China new home prices collapsed -0.38% MoM, which indicates that their property sector is still under pressure, a negative news for global macro sentiment.
• Japan Oct-23 exports edging hike +1.6% YoY which bodes well for the Yen which has been under pressure since the beginning of the year.
• Global bond yields mostly closed lower; the German bond 10-yr yield finished 4.4 bps higher to 2.56%, the UK gilt 10-yr yield fell -7.7 bps to 4.10%. Meanwhile, the Japanese GB 10-yr yield fell by -1.1 bps to 0.76%.
Domestic Market Updates
• Indonesian benchmark series of LCY government mainly rose Thursday (Nov 16, 2023), with the 10-yr benchmark yield remains flat at 6.94%.
• IDR stood flat against the USD (USD/IDR fell 0.06% to 15,545) Thursday (Nov 16, 2023).
• In the medium term, a gradual reversal of the current account balance to a deficit is expected to increase the dependency of the domestic 10-yr yields on portfolio flows – thereby increasing volatility in the currency.
• Domestic banks was seen to have absorbed the SBN positions of BI amounting to IDR20tn, while foreign outflows of IDR1.8tn was observed during the start of this week up to Nov 15, 2023.
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 6.70-6.80% for today.
• Attractive Indo GB series to be traded today : FR0040, FR0081, FR0096, FR0100.
Disclaimer On
FR40
FR81
FR96
FR100
