Global Market Update
• The benchmark 10-year UST note yield rose 8 bps to 3.19% on Wednesday (08/31/22).
• Meanwhile the benchmark 2-year UST note yield rose by 6 bps to 3.50% at the same time.
• The spread between 2/10-year UST note yield slightly narrowed to -31 bps from previously -33 bps.
• US stock indices extended declines on Wednesday. DJI dropped 0.88%; S&P 500 fell 0.78% whilst Nasdaq Composite lost 0.56%.
• ECB policy maker is said to consider a 75 bps rate hike in Sep-22 meeting given high inflationary pressure.
• Euro Area inflation rate increased by 9.1% YoY in Aug-22, slightly higher than previous month figure of 8.9% YoY and 10 bps higher than consensus estimate.
Domestic Market Update
• The benchmark 10-year Indo GB yield (FR0091) rose marginally by 1 bps to 7.11% on Wednesday (08/31/22).
• The IDR was unchanged against USD and was closed at IDR14,843/USD on Wednesday.
• Indonesia’s 5-year CDS rose to 110.66 bps on Wednesday (vs 107.94 bps on Tuesday).
• Indonesia S&P manufacturing PMI increased 0.4 MoM to 51.7 in Aug-22, marking the highest figure since Apr-22 and 12-straight month of growth boosted by further economic recovery.
• However we believe that challenge remains on inflation side. Bank Indonesia (BI) estimates a deflation of -0.13% MoM in August 2022. However, annual inflation is at +4.77% YoY.
• We estimate deflation to occur at -0.05% MoM indicating an increase in an annual inflation of 4.85% YoY in August 2022 in line with the decline in prices of several food commodities such as shallots, red chilies, cooking oil and cayenne pepper.
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 7.10-7.30% for today.
• Attractive Indo GB series to be traded today : FR0063, FR0070, FR0042, FR0047, FR0052, FR0085, FR0091 and FR0096.
Disclaimer On
