22 November 2023
Fixed Income Report November 22, 2023
Global Market Updates
• Wall Street equities slightly declined Tuesday (Nov 21, 2023), DJI dropped -0.18%, S&P 500 fell -0.20%, and Nasdaq closed down -0.58%. Stocks on Tuesday closed lower as some unsatisfactory corporate earnings reports weighed on the overall market.
• US Treasury 10-yr yields dropped 1 bps to 4.41%, followed by shorter-termed UST 2-yr yield that closed down 3 bps to 4.86%.
• Bond yields dropped in response to the U.S. Chicago Fed’s less optimistic than anticipated data and recent home sales data. The unimpressive data bolstered expectations that the Fed is done raising interest rates.
• The FOMC minutes of Nov-23 indicated that The Fed is still adopting a wait and see stance and that they lean towards maintaining rates at the current level for some time.
• Meanwhile, market participants are pricing in no more rate hikes and expects 71% chance The Fed to begin it’s 25 bps rate cuts at May-24, FOMC meeting.
• Global bond yields moved lower; the German bund 10-yr yield fell -4.5 bps to 2.66%, the UK gilt 10-yr yield fell -2.0 bps to 4.10%. The Japanese GB 10-yr yield dropped by -4.7 bps to 0.70%.
Domestic Market Updates
• Indonesian benchmark series of LCY government bonds closed higher Tuesday (Nov 21, 2023), as the 10-yr benchmark yield slid 3.6 bps to 6.64%.
• IDR closed stronger against the USD (USD/IDR dropped -0.03% to 15,440) Tuesday (Nov 21, 2023).
• Investors responded positively to the government's issuance of SBSN securities yesterday, successfully garnering a total incoming bid nominal of IDR18.5tn vs IDR15.8tn previously, with PBS036 securing the highest awarded bids of IDR4.7tn out of the total awarded amount sum of IDR9.7tn.
• The auction result was significantly contrast compared to the previous auction awarded amount sum IDR2.2tn, indicating that investor are optimistic enough coinciding with the rally in UST as the Fed is expected to start cutting rates as soon as May-24.
• Indonesia’s current account improved in 3Q23 registering a deficit of USD1.5bn vs previous quarter’s deficit of USD7.4bn amidst the growing uncertainties in the global economy.
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
