21 November 2023
Fixed Income Report November 21, 2023
Global Market Updates
• Wall Street equities experienced a modest increase Monday (Nov 20, 2023), DJI rose +0.01%, S&P 500 increased +0.13%, and Nasdaq climbed +0.03%. Stocks continued to increase in value during Monday afternoon as UST yields retreated from their earlier highs.
• US Treasury 10-yr yields dropped 2bps to 4.42%. Meanwhile, shorter-termed UST 2-yr yields saw a slight uptick of1 bps to 4.89%.
• The gain in bonds was assisted by the decent 20-yr T-bonds auction of USD16bn which achieved a bid-to-cover ratio of 2.58 though slightly below 10-auction average of 2.66.
• Additionally, investors will be closely monitoring the release of the Federal Reserve’s November meeting minutes on Tuesday, aiming to glean fresh insights into the future direction of interest rates.
• German Oct-23 PPI has been reported at -0.1% MoM and -11.0% YoY, aligning with expectations.
• PBoC announced China Loan Prime Rate for 1-yr Nov-23 at 3.45% and 5-yr Nov-23 at 4.20%.
• The US leading Index Oct-23 fell -0.8% following Sept-23 -0.7%, the biggest decline in 6 months.
• Global bond yields was mixed; the German bund 10-yr yield increased +0.5 bps to 2.59%, the UK gilt 10-yr yield fell -0.60 bps to 4.10%. The Japanese GB 10-yr yield dropped by -0.6 bps to 0.75%.
Domestic Market Updates
• Indonesian benchmark series of LCY government closed higher Monday (Nov 20, 2023), as the 10-yr benchmark yield slid to 6.63%, leaving the 2s10s curve at an inversion of -11 bps.
• IDR weakened against the USD (USD/IDR down -0.31% to 15,445) Monday (Nov 20, 2023).
• The 5-yr CDS continued to close lower, last was by 2.8% down to 74.79, indicating investors’ readiness to assume greater risk willingly.
• The government will also hold SBSN auction today with a total indicative target at IDR9tn. We expect the investor demand to remain subdued, with the issuance to remain around IDR2tn, due to seasonality factor of approaching year’s end.
• The gov’t has down-revised the SBN issuance target for 2023 from IDR712.9tn to IDR437.8tn according to presidential decree No. 75 2023, We view that this will help maintain the yields to remain stable at the current levels.
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 6.50-6.70% for today.
• Attractive Indo GB series to be traded today : FR0040, FR0081, FR0096, FR0100.
Disclaimer On
FR40
FR81
FR96
FR100
