24 Oktober 2023
Fixed Income Report October 24, 2023
Global Market Updates
• Wall Street indexes closed mixed Monday (Oct 23, 2023) as the Middle Eastern conflict tensions eased while UST 10-yr yields slid down, providing support for the Nasdaq to gain 0.27%, with the VIX Index easing down 6.2% to 20.4.
• UST 10-yr yields fell 9 bps to 4.86%, followed by the UST 2-yr yields that eased down to 5.05% on the notion that the Fed’s appetite of raising rates further has waned.
• Global yields also followed suit; the 10-yr German bund yield slid 1.5 bps to 2.87%, the Uk 10-yr gilts slid back by 5.2 bps to 4.60%.
• Meanwhile, the Japanese 10-yr GB yield continues its climb, reaching 0.88%, which prompted the BoJ to conduct an unscheduled bond-operation today.
• This was expected on the back of BOJ’s efforts to reflate growth, whilst its currency being under import pressure, but the rise in yields have been too aggressive and incited talks on putting a new cap on yields before raising their policy rates.
Domestic Market Updates
• Indonesian benchmark series of LCY government bonds continued to depreciate Monday (Oct 23, 2023), with the 10-yr benchmark series yield moving a tad higher to 7.10%.
• The short-end of the curve saw a more aggressive yield movement yesterday, rendering the 2s10s curve to drop 19 bps to 23 bps.
• IDR weakened further against USD and other global major currencies (USD/IDR rose 0.4% to 15,935).
• Indonesian gov’t securities posted a net outflow of IDR2.87tn throughout the previous week (as of Oct 20, 2023), with banks having posted the largest outflow of IDR23.1tn, countered by BI’s purchase operation amounting to IDR19.7tn, whilst non residents have started to accrue a net inflow of IDR0.6tn.
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 7.00-7.20% for today.
• Attractive Indo GB series to be traded today : FR0040, FR0059, FR0081, FR0100.
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