Global Market Updates
• Major global stock indexes was closed mixed Monday (Oct 2, 2023), with US tech stock indexes anomalously garnering strength amid rising bond yields and uncertainty looming the air.
• Fed’s Bowman contributed a hawkish comment to the conversation, pushing US Treasuries yields higher. The 10-yr UST yield, as a result, leapt a whole 10 bps to 4.69%, followed by the 2-yr yield that surged its way to 5.12%.
• The stronger-than-expected Sep ISM manufacturing index, rising 1.4 pts to 49.0 instead of the expected weakening to 47.9 added salt to the wound.
• European global bonds followed suit, with the German 10-yr bund yield rising 8.4 bps to 2.92%, the UK 10-yr gilt rocketing 12.7 bps to 4.56%.
• As if that wasn’t enough, JGB 10-yr yield also picked momentum despite BoJ’s intervention, leaping 1.2 bps to 0.78% and brings more speculation to the table. Fund repatriation risk might agitate the US market even more, further putting downside risks to UST and EM’s bond mark.
• The VIX index soared 3.4% to 18.11, confirming the fact that markets agitation has sparked up again in the midst of uncertainty.
Domestic Market Updates
• Indonesian benchmark series of LCY government bonds saw massive sell-offs Monday (Oct 2, 2023). The 10-yr benchmark series yield soared 7.3 bps to 6.97%. The 2s10s Indo GB spread bear steepened to 68 bps.
• IDR closed mixed against global major currencies, depreciating against the USD (USD/IDR jumped 0.49% to 15,530).
• Over the past week leading up to Sep 29, 2023, Indonesian government securities saw a net inflow of IDR34tn, with BI accounting for the biggest share of net buys (IDR42.5tn) as an attempt to tame down the yield surges.
• Still, the yields succumbed to the wave of net outflows from non-residents during the same time period, accounting for IDR13.3tn of the net sells amid global uncertainty, followed by domestic banks by IDR33.8tn as they have to service the growing credit demand.
• We expect the SBN auction to be held today to incur less activities due to the persisting risk-off sentiments.
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 6.95-7.05% for today.
• Attractive Indo GB series to be traded today : FR0082, FR0087, FR0096, FR0100.
Disclaimer On
