Global Market Update
• The benchmark 10-year UST note yield dropped 8 bps to 3.93% on Thursday (10/27/22).
• At the same time, the benchmark for short term rate of 2-year maturity fell 13 bps to 4.28%.
• Yield curve inversion narrowed and the spread of 2/10 year benchmark stood at - 35 bps (vs -40 bps on the previous day).
• US equity indices closed mixed last night. The DJI increased of 0.61%; while S&P 500 declined 0.61% and Nasdaq Composite took a further 2.04% drop.
• Germany’s GfK Consumer Confidence index reported to slightly increase to -41.9 for Nov 22 from -42.8 in Oct-22.
• ECB raised its reference interest rate policy by 75 bps to 2%, in-line with consensus estimate.
• US GDP growth rate reported to beat forecasts, reaching 2.6% YoY in 3Q22 instead of 2.4%.
Domestic Market Update
• The benchmark 10-year Indo GB yield (FR0091) dropped 6 bps to 7.55% on Thursday (10/27/22).
• Indonesia’s CDS continued to decline and at the same time domestic currency IDR slightly depreciated against USD.
• Indonesia’s 5-year CDS stood at 143.11 bps yesterday (vs 146.71 the previous day).
• The IDR slightly weakened against USD and was closed at IDR15,568/USD on Thursday (vs IDR15,563/USD the previous day).
• An increase in the benchmark interest rate by 125 bps since Aug-22 is expected to be followed by an increase in the banking sector interest rates.
• Liquidity in banking is still sufficient so that the transmission of monetary policy has a lagging period. Monetary policy transmission has begun, as reflected in IndONIA's interest rate which has reached 4.29% as of 27 October 2022 (vs. 3.85% on 3 October 2022).
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 7.45-7.65% for today.
• Attractive Indo GB series to be traded today : FR0070, FR0077, FR0081, FR0095, FR0052, FR0073, FR0054, FR0091, FR0096.
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