Global Market Update
• The benchmark 10-year UST note yield increased 5 bps to 3.95% on Thursday (10/13/22).
• On the other hand, the benchmark for short term rate of 2-year maturity jumped 18 bps at 4.47% at the same time.
• Yield curve inversion worsened and the spread of 2/10 year benchmark stood at -52 bps (vs -39 bps on the previous day).
• Despite the jump in US government bond yield, US equity indices rebounded sharply increasing more than 2%.
• The DJI jumped 2.83% and lead the gain, whilst S&P 500 and Nasdaq Composite rose 2.60% and 2.23% respectively.
• The annual inflation rate in the US slowed to 8.2% YoY in Sep-22, the lowest in seven months, compared to 8.3% YoY in Aug-22 but still above consensus estimate of 8.1% YoY.
• However, the core inflation rate increased 6.6% YoY in Sep-22, marking the highest since 1982, increasing from previous month rate of 6.3% YoY, and still above consensus estimate of 6.5% YoY.
• Majority of market participants still expect Fed will raise another 75 bps in Nov-22 meeting.
Domestic Market Update
• The benchmark 10-year Indo GB yield (FR0091) dropped 2 bps to 7.33% on Thursday (10/13/22).
• Indonesia’s CDS is gradually declining, yet domestic currency IDR still depreciating against USD.
• Indonesia’s 5-year CDS dropped below 160 bps to 159.71 bps yesterday (vs 159.77 bps on the previous day).
• The IDR weakened against USD and was closed at IDR15,362/USD yesterday (vs IDR15,357/USD previous day).
• On the data front, Domestic car sales reached 99,986 units in September-22, up from 96,956 units in August-22.
• Car sales in Indonesia grew 18.9% YoY in September-22 and has continued to increase since June-22 and indicates that the economic recovery is continuing.
• Now car sales have started to return to their normal pre-pandemic range.
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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