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Company Update

18 November 2022

Fixed Income Report November 18, 2022

Global Market Update
• The benchmark 10-year UST note yield jumped 10 bps to 3.77% on Thursday (11/17/22).
• The benchmark for short term rate of 2-year maturity rose 8 bps to 4.35%.
• Yield curve inversion narrowed and the spread of 2/10 year benchmark stood at -66 bps (vs -68 bps the previous day).
• US equities indices continued its decline. The DJI went down by -0.02%; while S&P500 declined -0.31% and Nasdaq Composite dropped -0.35%.
• Japan recorded a balance of trade deficit of JPY2.16 trillion in Oct-22 (vs JPY2.09 trillion in Sep-22) from a deficit of JPY0.09 trillion in Oct-21 and missing market consensus by large (JPY1.61 trillion of deficit).
• US reported a decline in housing starts of -4.2% MoM to USD1.42 million in Oct-22, falling by -8.8% YoY, as 21-year high mortgage rates and surging material costs struck US housing market.
 
Domestic Market Update
• The benchmark 10-year Indo GB yield (FR0091) increased 2 bps to 7.02% on Thursday (11/17/22).
• Indonesia’s CDS hiked 9.67 bps, at the same time domestic currency IDR depreciated against USD.
• Indonesia’s 5-year CDS stood at 112.89 bps yesterday (vs 103.22 the previous day).
• The IDR weakened against USD and was closed at IDR15,663/USD on Thursday (vs IDR15,603/USD the previous day).
• BI officially announced its decision to increase the BI7DRR interest rate by 50 bps to 5.25% in its efforts to meet the 3.0 ± 1% inflation rate target by 1H23 and to strengthen IDR amidst global financial market uncertainty.
• Ministry of Finance reported a total bid value of IDR469 billion and a total awarded value of IDR299 billion in the Government Bond Debt Switch auction held on Thursday (11/17/22), with FR0059 being the most traded series (IDR209 billion awarded) for the FR0096 series.
 
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 7.00-7.20% for today.
• Attractive Indo GB series to be traded today : FR0070, FR0077, FR0081, FR0095, FR0052, FR0073, FR0054, FR0091, FR0096.
 
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