12 September 2023
Fixed Income Report September 12, 2023
Global Market Updates
• Wall Street equities strengthened Monday (Sep 11, 2023) lead by gains from the tech sector , backed by positive catalysts such as Tesla’s prospective Dojo supercomputer that is poised to boost valuation by USD500bn and Apple’s semiconductor deal with Qualcomm.
• US and European stocks also garnered upwards momentum from China’s recent development as the yuan rallied after deflationary pressures was seen to subside, coupled with a strengthening in the credit data that will be key to support the property sector back to its feet.
• US Treasury notes, however, depreciated Monday, with the 10-year UST yields hiking a 3 bps to 4.29%, though the shorter-termed 2-yr notes edged down 1 bps to 4.97%, on the back of rise in 10-yr inflation breakeven rate and Japanese yield movements.
• The 10- yr JGB had soared almost 1 bps and now stands at 0.72% after BoJ governor proclaimed plans to end the negative interest rates, possibly by the end of this year. UK 10-yr gilts rose 5 bps to 4.47%, followed by German 10-yr bunds hike by 3 bps to 2.64%.
Domestic Market Updates
• Indonesian benchmark series of LCY government bonds retreated Monday (Sep 11, 2023). The 10-yr benchmark series yield rose 5 bps to 6.59%. The 2s10s Indo GB spread widened back by 38 bps (vs previously 34 bps).
• BoJ’s plan on commencing monetary tightening is poised to incite fund repatriations into their domestic bond market from the US, Europe, as well as Indonesia, which means more potential foreign outflows for Indonesia’s bond market.
• The good news is that credit growth from China should be a solid indicator of a turning point in their economy, which will help prop up Indonesia’s trade performance.
• IDR mainly weakened against global major currencies, while staying flat against the USD.
• The government’s auction for sukuk today holds an indicative target of IDR6tn. We expect investor demand for sukuk to slip, and potentially reflect lower bids volume than the last auction.
Market Forecast
• Given the recent developments that unfolded within the global and domestic markets, we expect the 10 year Indo GB yield to move within the range of 6.50-6.60% for today.
• Attractive Indo GB series to be traded today : FR0081, FR0082, FR0087, FR0096, FR0100.
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