Global Market Update
• The benchmark 10-year UST note yield increased 3 bps to 4.10% on Wednesday (11/02/22).
• At the same time, the benchmark for short term rate of 2-year maturity rose 7 bps to 4.62%.
• Yield curve inversion widened and the spread of 2/10 year benchmark stood at -52 bps (vs -41 bps the previous day).
• US equity indices saw a sharp decline. The DJI declined 1.55%; while S&P 500 fell 2.50% and Nasdaq Composite took a 3.36% drop.
• The Federal Reserve reported to raise the interest rate policy by 75 bps to 4% at the Nov-22 meeting, aiming to return inflation to 2%.
• Fed’s move to raise 75 bps was already anticipated by market participants. However, despite Fed’s Chair Powell also hinted that there may come to slow the pace of rate hike, markets still reacted negatively.
• In addition, Fed also reiterate their policy to reduce its holdings of Treasury Securities, agency debt as well as MBS.
Domestic Market Update
• The benchmark 10-year Indo GB yield (FR0091) dropped 8 bps to 7.38% on Wednesday (11/02/22).
• Indonesia’s CDS continued to lower, yet the domestic currency IDR still depreciating against USD.
• Indonesia’s 5-year CDS stood at 134.26 bps yesterday (vs 136.60 the previous day).
• The IDR weakened against USD and was closed at IDR15,648/USD on Wednesday (vs IDR15,628/USD the previous day) and hitting the lowest level throughout 2022.
• Going forward, BI still see pressure on IDR to remain linger as USD strengthen due to US restrictive monetary policy.
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 7.35-7.55% for today.
• Attractive Indo GB series to be traded today : FR0070, FR0077, FR0081, FR0095, FR0052, FR0073, FR0054, FR0091, FR0096.
Disclaimer On
