Global Market Update
• The benchmark 10-year note yield little changed and closed at 3.32% on Friday (09/09/22).
• On the other hand, the 2-year benchmark yield increased +5 bps to 3.56% at the same time.
• Spread between 2/10-year UST note yield was at -24 bps, widening from previous position at -19 bps indicating a yield curve inversion.
• US stock indices were closed higher on the last trading day last week. The DJI rose +1.19%; S&P 500 was up +1.53%; whilst Nasdaq Composite jumped +2.11%.
• Wary of slowing economic growth remains concern for bond and stock investors. • Major Western Central Banks now consider a further tightening of their monetary policy as they weigh on stability over growth.
• Fighting against a climbing inflation is now major Western Central Banks top priority. As long as inflation has not been seen to decline to the preferred level of 2%, rate hikes would still be the key policy on top of balance sheet reduction.
Domestic Market Update
• The benchmark 10-year Indo GB yield (FR0091) declined marginally by -1 bps to 7.15% on Friday (09/09/22).
• Although declining marginally, IDR appreciation and lower CDS provide favorable for government bond valuation.
• The IDR strengthened against USD and was closed at IDR14,830/USD on Friday (vs IDR14,901/USD on Thursday).
• Indonesia’s 5-year CDS declined to below 120 bps and was at 110.16 bps on Friday (vs 114.46 bps on the previous day).
• On the data front, Bank Indonesia (BI) noted Indonesia's retail sales grew +6.2% YoY in Jul-22, higher than +4.1% YoY in Jun-22.
• In addition, BI also expect inflation to increase by +0.77% MoM on the back of rising fuel prices based on its weekly survey.
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 : FR0081, FR0086, FR0090, FR0064, FR0082, FR0087, FR0091, FR0096.
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