Company Update

07 November 2022

Fixed Income Report November 7, 2022

Global Market Update
• The benchmark 10-year UST note yield increased 2 bps to 4.16% on Friday (11/04/22).
• At the same time, the benchmark for short term rate of 2-year maturity decreased 5 bps to 4.66%.
• Yield curve inversion stayed flat and the spread of 2/10 year benchmark stood at - 50 bps.
• US equities ended last week with a rebound. The DJI increased 1.26%; while S&P 500 rose 1.36% and Nasdaq Composite climbed 1.28%.
• US non-farm payrolls added 261k in Oct-22 lower than 315k reported in Sep-22, yet beating consensus estimate at 200k.
• However, US unemployment rate increased 200 bps to 3.7% in Oct-22, higher than consensus estimate at 3.6%.
• Elsewhere, RBA’s board mentioned further rate hikes will be needed as inflation in Australia is too high. The committee said Australia’s inflation could hit 8% at a peak or 25 bps higher than previous forecast.
• Previously RBA raised the cash rate by 25bps to 2.85% during its November 2022 meeting, matching market forecasts. The move marked the seventh straight rate hike, taking borrowing costs to a level not seen since April 2013.
Domestic Market Update
• The benchmark 10-year Indo GB yield (FR0091) was rose 4 bps to 7.44% on Friday (11/04/22).
• Indonesia’s CDS was relatively flat, at the same time domestic currency IDR depreciated against USD.
• Indonesia’s 5-year CDS stood at 140.15 bps yesterday (vs 141.10 the previous day).
• The IDR weakened against USD and was closed at IDR15,738/USD on Friday (vs IDR15,697/USD the previous day).
• We expect Indonesia’s GDP to grow 1.76% QoQ/5.66% YoY in 3Q22. We foresee the economic expansion was driven by : 1) strengthening household consumption; 2) increasing direct investment & 3) robust exports performance.
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
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