Global Market Update
• US government bond market experienced a decline after commemorating Columbus Day.
• The benchmark 10-year UST note yield increased 7 bps to 3.95% on Tuesday (10/11/22).
• On the other hand, the benchmark for short term rate of 2-year maturity was flat at 4.31% bringing the spread of 2/10 year benchmark at -36 bps.
• US stock indices, S&P 500 and Nasdaq Composite dropped 0.65% and 1.10% respectively.
• Market participants remain cautious on US inflation data release this week as they expect consumer prices still increasing above 8% at an annual pace.
• In addition, BoE move to purchase gilts has failed to calm the market as yield of its 10-year benchmark remains hovering above 4% and GBP/USD continued to drop and now traded at 1.0964/USD.
Domestic Market Update
• The benchmark 10-year Indo GB yield (FR0091) increased 9 bps to 7.35% on Tuesday (10/11/22).
• The increase in the local currency benchmark government bond yield was in- line with IDR depreciation and weakening risk perception.
• Indonesia’s 5-year CDS finally topping 160 bps again yesterday.
• The IDR depreciated against USD and was closed at IDR15,358/USD on Tuesday (vs IDR15,318/USD on Monday).
• Based on the latest auction result, investors appetite to invest in government bond declined.
• Government has awarded IDR8.22tn of 7 series of SUN, while incoming bids totaled IDR15.00tn. The amount of awarded bids were lower than indicative target of IDR10.00tn.
• On the data front, Bank Indonesia survey reported retail sales grew 4.9% YoY in August-22 and is estimated to grow 5.5% YoY in Sep-22.
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 7.25-7.45% for today.
• Attractive Indo GB series to be traded today : FR0070, FR0077, FR0081, FR0095, FR0052, FR0073, FR0054, FR0091, FR0096.
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