Global Market Update
• The benchmark 10-year note yield increased 4 bps to 3.83% on Friday (09/30/22).
• On the other hand, the 2-year benchmark yield gained 8 bps to 4.28% at the same time.
• Spread between 2/10-year UST note yield was at -45 bps, widening from the previous day position at -42 bps.
• Following the rise in the risk free rate, US stock market continued to fall more than 1% on the previous week last trading day.
• The DJI dropped 1.71%, whilst at the same time S&P 500 and Nasdaq Composite fell 1.51% respectively.
• Last week, inflation rate in the Euro Area was reported increasing by 10% YoY in Sep-22 according to preliminary estimate.
• Euro Area inflation finally hit the double-digits for the first time ever (vs 9.1% in Aug-22).
Domestic Market Update
• The benchmark 10-year Indo GB yield (FR0091) declined 4 bps to 7.35% on Friday (09/30/22).
• Indonesia’s 5-year CDS decreased but still above 160 bps last week. Indonesia’s risk premium was at 161.35 bps.
• The IDR remained above 15,000/USD and was closed at IDR15,227/USD last week.
• On the data front, Indonesia’s PMI manufacturing rose 2.0 points to 53.7 in Sep- 22 (vs 51.7 in Aug-22), indicating that domestic economy continued to recover despite unfavorable global macro environment.
• In addition, Indonesia’s PMI manufacturing figure in Sep-22 was the highest since Jan-22 and also hitting 13th straight month of growth.
• Bank Indonesia (BI) and economists expected that Indonesia’s Sep-22 inflation will increase >1% MoM and >5.9% YoY.
• The increase in inflation is driven by subsidized fuel price hike 30% that we expect to cause inflation rise 1.14% MoM/5.93% YoY.
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 : FR0063, FR0070, FR0077, FR0081, FR0090, FR0064, FR0095, FR0082, FR0087, FR0091, FR0096.
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