Global Market Update
• The benchmark 10-year UST note yield dropped 9 bps to 4.01% on Wednesday (10/26/22).
• At the same time, the benchmark for short term rate of 2-year maturity fell 7 bps to 4.41%.
• Yield curve inversion widened and the spread of 2/10 year benchmark stood at -40 bps (vs -38 bps the previous day).
• US equity indices saw a decline. The DJI only went up 0.01%; S&P 500 declined 0.74% and Nasdaq Composite dropped 2.04%.
• Bank of Canada (BoC) raised the benchmark policy rate by 50 bps to 3.75%, slightly lower than consensus estimate of 75 bps hike in Oct-22
• Consensus projected ECB’s interest rate decision to be hawkish in Thursday (10/27/22), increasing to 2% from its current 1.25% rate.
• Australia’s inflation rate in 3Q22 reported to hit 7.3% YoY (vs 6.1% YoY in 2Q22), surpassing consensus’ forecast of 7%, reaching an all-time-high in 32 years.
Domestic Market Update
• The benchmark 10-year Indo GB yield (FR0091) was down 3 bps to 7.61% on Wednesday (10/26/22).
• Indonesia’s CDS dropped 12.4 bps, at the same time domestic currency IDR appreciated against USD.
• Indonesia’s 5-year CDS stood at 146.71 bps yesterday (vs 159.11 the previous day).
• The IDR strengthened against USD and was closed at IDR15,563/USD on Wednesday (vs IDR15,623/USD the previous day).
• Coordinating Minister for Economic Affairs Airlangga Hartarto predicts Indonesia's trade balance surplus will reach USD60 billion in 2022.
• We estimate that Indonesia's trade balance surplus will continue until the end of the year with a total value of USD50-55 billion.
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 7.50-7.70% for today.
• Attractive Indo GB series to be traded today : FR0070, FR0077, FR0047, FR0064, FR0095, FR0082, FR0091, FR0096.
Disclaimer On
